SSAS - Protecting Myself

jojororo

Hi,

I have a pension fund of just under £200k from when I used to work in corporate world

I now run my own Limited company and have been speaking to a pension company about the "benefits" of moving the fund into a SSAS

Everything they have told me "appears" to stack up with information I have read from various forums and the official HMRC websites

For example, they have said I can withdraw a maximum of 5% of fund and invest into the business for what ever reason I choose.

Any other "investments" into my own Limited company have to be for an asset with a set value such as plant or machinery. I can tust take money out to cover cash flow - any diversion from this is subject to a 55% (or amount borrowed) penalty/fine.

My concern with the company I am dealing with is that they have only been around for 9 months so have no track record or time for bad/scam reports to appear.

I have read a lot about how many cowboys are in this market place and its making me nervous.

So how do I know if they are genuine or potential scammers

Are they any trade bodies/associations they should be registered with ?

Would I be protected under the FSA ?

Is there any way they could get hold of my fund and "do a runner" ?

Would my current pension administrators have to ensure they are properly regulated before transferring the funds ?

What else should I look out for or be checking in my due diligence ?

Thanks In Advance
JoJo

Linton

Did you contact this company? In which case presumably you had some reason to choose them. Or did they cold call you in which case you should be very very careful - the FCA ban cold calling by regulated financial companies except under specific circumstances. Cold calling is how the scammers have recruited their victims in the past.

If you want to set up a SSAS I suggest you talk to an established, regulated and reputable company of your choice. Whether a high street IFA would have the knowledge I dont know.

What you are proposing seems extremely risky to me. If your company fails you lose your job and risk your pension - a disastrous combination.

atush

It just doesn't 'sound' right.


How did you and this company get involved?

jojororo

I met them at the Business Show in London last November

dunstonh

Is the company FCA regulated?

Most of the scams come from unregulated companies or use unregulated introducers to do all the dodgy stuff and only use, an often unsuspecting, regulated firm to transact only the bit they need to do. You only get additional consumer protection from FCA regulated firms.

SSAS are a niche product for a minority of people. In 20 years, I have only dealt with one SSAS. So, whilst they exist and can serve a purpose they are not every day products that you would expect to be marketed on unless some scam or dodgy event is taking place.

gadgetmind

Didn't a Labour ex-PM use an SSAS to move his pension offshore and take it all tax free?

Surely this can't be dodgy because politicians are supposed to lead by example?

Aegis

jojororo wrote: »

Hi,

I have a pension fund of just under £200k from when I used to work in corporate world

I now run my own Limited company and have been speaking to a pension company about the "benefits" of moving the fund into a SSAS

Everything they have told me "appears" to stack up with information I have read from various forums and the official HMRC websites

Whilst not mainstream, SSASs are legitimate and can have a place where a potential member also runs their own limited company. It's vital to ensure that you deal with an adviser who has experience in this sector though, as the pensions sector is in general rife with scams and gross misunderstandings, which can lead to huge penalties.

For example, they have said I can withdraw a maximum of 5% of fund and invest into the business for what ever reason I choose.

This, for example, is simply not true as far as I can remember. A SSAS can invest in sponsoring company shares up to 5% of the pension value, but it must be made as an arm's length transaction, therefore the SSAS must receive actual shares which must be subject to a third party valuation before purchase and subsequent disposal. If dividends are paid to shareholders, the SSAS must then receive its share going forward.

Without doubt, this would not be a withdrawal, it would be an investment.

Incidentally, a SIPP would have more flexibility here, as SIPPs are able to invest into any investment approved by the trustees to any value, so 100% of the fund value could go into the company shares to free up capital.

In both cases, the shares are purchased from the current shareholder, so the company may have trouble benefiting from the purchase without a further arrangement.

Any other "investments" into my own Limited company have to be for an asset with a set value such as plant or machinery. I can tust take money out to cover cash flow - any diversion from this is subject to a 55% (or amount borrowed) penalty/fine.

The SSAS can loan money or buy assets and lease them back to the company for a market rental rate, but I'm unfamiliar with any rules which would allow the SSAS to buy plant and machinery for the company outright. As far as I'm aware you can't withdraw money to cover cash flow without a loan agreement in place, and even then it would have to be to the company and at a market rate.

My concern with the company I am dealing with is that they have only been around for 9 months so have no track record or time for bad/scam reports to appear.

I have read a lot about how many cowboys are in this market place and its making me nervous.

So how do I know if they are genuine or potential scammers

Are they any trade bodies/associations they should be registered with ?

Would I be protected under the FSA ?

Is there any way they could get hold of my fund and "do a runner" ?

Would my current pension administrators have to ensure they are properly regulated before transferring the funds ?

What else should I look out for or be checking in my due diligence ?

Thanks In Advance
JoJo

I think you're right to be skeptical. Find a different adviser, one that has been in practice for years rather than months and where they have specialists who can deal with SSASs. As you've correctly identified, this is a very specialised area, and brand new companies talking about all the benefits you can get from your pension now should always be treated with skepticism.