Lisa Webster: 2024 could mean SOS

Small Self-Administered Schemes – SSASs – are the original self-invested pension. The first schemes written will be approaching the big 50 in the next couple of years. They have almost two decades on the new kid on the block that is SIPP. However, rather than preparing the party balloons, will we soon be readying for their wake? The DWP currently has its consultation out on The Occupational and Personal Pension Schemes (General Levy) Regulations. This review seeks views on proposed changes to both structure and rates of the General Levy. As a reminder, the General Levy applies to defined benefit, defined contribution, master trust and personal pensions, with different rates applying depending on the type of scheme in question. The levy funds The Pension Regulator (TPR), the pension parts of the Money and Pensions Service (MaPS) and The Pension Ombudsman (TPO). There is currently a deficit, and the review sets out three ways to deal with it over the next three years. Option 1 is basically to keep rates as they are and let the deficit grow – to £200 million by 2030. This means taxpayers making up the shortfall, and in all likelihood higher increases in the future. Option 2 is a 6.5% per year rise across the board to current rates for all schemes. Option 3 is a 4% increase per year across the board – plus an additional premium for small schemes of £10,000, starting from 2026. Worryingly, the consultation makes it clear that option 3 is the preferred option. There are numerous references in the document to schemes of between 2-11 members, so there is no exemption for SSAS. The £10,000 premium will apply to all schemes with less than 10,000 members – and supports the government’s objective of consolidation of smaller schemes. The review talks about schemes with 2-11 members having lower governance standards, lower knowledge and awareness of pensions, and lower compliance levels. This is all quite possibly true in many cases, but re-instating the requirement to have a professional trustee would be a far more palatable way of dealing with the issue. Another reason for the government wanting consolidation is to increase the value for money, but the review seems to miss the point that under SSAS this isn’t trustees making investment decisions for their members, rather the trustees are the members. The proposal is for the premium to kick in from 2026 to give small schemes the chance to transfer members out and windup. There is no account taken of the fact many SSASs will be invested in commercial property, so this could be a costly process. Others will have loan backs which are not permitted in any other type of scheme and then there are many schemes used by small family businesses for succession planning that will face a stark choice between an extortionate levy or being torn apart. If you have SSAS clients then now is the time to voice your concerns and respond to the review. The consultation closes on 13 November – details can be found here: https://www.gov.uk/government/consultations/the-occupational-and-personal-pension-schemes-general-levy-regulations-review-2023 Let’s hope industry opinion persuades the DWP to prescribe alternative treatment so we can all make it to the 50th parties. Lisa Webster is senior technical consultant at AJ Bell. She is an economics graduate with over 15 years’ experience in financial services. Prior to joining AJ Bell in May 2014 she spent nine years working in senior technical and consultancy roles at a major SIPP and SSAS provider. She is part of the AJ Bell Technical Team, responsible for providing regulatory and technical analysis to the business and outside world. Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Twitter: @lisasippster

Lisa Webster: 2024 could mean SOS – Save our SSAS!

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