SSAS Pension Problem

pe567567567

Briefly, I have a SSAS which was started years ago. I am now retired and the my company does not exist any more. There is a factory in the pension and  virtually no cash. The rent gets paid in monthly and amounts withdrawn to live on. The pension company does nothing, the little cash is in the bank they specify, and they charge over £3,000pa in fees. My question is can I change this pension to a different type or with a different trustee to save money, or preferably, can I just not have the pension at all any more, and look after my own tax on the rent of the factory.

Marcon

pe567567567 said:

Briefly, I have a SSAS which was started years ago. I am now retired and the my company does not exist any more. There is a factory in the pension and  virtually no cash. The rent gets paid in monthly and amounts withdrawn to live on. The pension company does nothing, the little cash is in the bank they specify, and they charge over £3,000pa in fees. My question is can I change this pension to a different type or with a different trustee to save money, or preferably, can I just not have the pension at all any more, and look after my own tax on the rent of the factory.

Who are the current trustees? What are the provisions in the rules of the scheme in relation to winding it up?

flaneurs_lobster

Are you the only member of the scheme (and a trustee) , with a professional trustee who is also the administrator?

poseidon1

pe567567567 said:

Briefly, I have a SSAS which was started years ago. I am now retired and the my company does not exist any more. There is a factory in the pension and  virtually no cash. The rent gets paid in monthly and amounts withdrawn to live on. The pension company does nothing, the little cash is in the bank they specify, and they charge over £3,000pa in fees. My question is can I change this pension to a different type or with a different trustee to save money, or preferably, can I just not have the pension at all any more, and look after my own tax on the rent of the factory.

In my view there is a far more fundamental question to ask yourself and that is whether this illiquid asset is a suitable basis for long term pension income. I would also be concerned about the lack of a substantial cash buffer ( or near cash), in the event the property becomes vacant with no replacement tenant in sight.

A SSAS by its nature is a more complex entity to administer and stay within HMRC guard rails compared to a SIPP so attracts higher professional fees as a result. Frankly I do not sense you have the competency to run it by yourself.

My suggestion is to seriously consider selling the factory ASAP and transfer the proceeds to a far more straight forward SIPP investing in conventional stocks and shares.

In passing you and all over SSAS owners of commercial property should be especially concerned about the forthcoming IHT regime in 2027 affecting all DC schemes

. Although I suspect property based SSAS will probably benefit from the 10 yearly instalment option to pay IHT bills, it defeats the whole point of the pension as a resource for the surviving family if the future income stream is wholly employed in servicing IHT plus interest thereon. Worse still the rental income could be entirely inadequate to service the eventual IHT bill.

Time to review if your current arrangement still makes fiscal sense.

Cash_Cow

£3000 seems an awful lot to admin one somewhat dormant SSAS - especially compared to what is charged for full on accounting costs for business/personal/spouse too.  I pay £1k for one SSAS property.  Follow the other suggestions here but you can transfer the SSAS to a better value provider im sure. There may be setup costs mind.

GDB2222

I’m right out of the loop these days, so correct me if I am wrong about this, but I think the op can take the factory out of the pension fund in the form of a single giant instalment of pension. He will be charged income tax on that, so he will need to think about how to fund the tax. After that he will own the factory himself, and he can dispense with the trustee admin company. 

Or is that all banned as a transaction between the ssas and the member? 

Cash_Cow

I would have thought you can sell the property but the ssas must receive the money. It doesn't care if it holds property or cash. If you then crystalise the pension you can take 25% and the rest at your marginal tax rate. Not a pro but thats my take 👍

Smudgeismydog

Cash_Cow said:

I would have thought you can sell the property but the ssas must receive the money. It doesn't care if it holds property or cash. If you then crystalise the pension you can take 25% and the rest at your marginal tax rate. Not a pro but thats my take 👍

Yes, the property is a SSAS asset, and so could be sold within the SSAS wrapper, which would improve liquidity and simplify the SSAS.

pe567567567

flaneurs_lobster said:

Are you the only member of the scheme (and a trustee) , with a professional trustee who is also the administrator?

Yes, only my wife and I and the Pension Company

pe567567567

Marcon said:

pe567567567 said:

Briefly, I have a SSAS which was started years ago. I am now retired and the my company does not exist any more. There is a factory in the pension and  virtually no cash. The rent gets paid in monthly and amounts withdrawn to live on. The pension company does nothing, the little cash is in the bank they specify, and they charge over £3,000pa in fees. My question is can I change this pension to a different type or with a different trustee to save money, or preferably, can I just not have the pension at all any more, and look after my own tax on the rent of the factory.

Who are the current trustees? What are the provisions in the rules of the scheme in relation to winding it up?

Ill see if I can dig them out and have a read through

pe567567567

poseidon1 said:

pe567567567 said:

Briefly, I have a SSAS which was started years ago. I am now retired and the my company does not exist any more. There is a factory in the pension and  virtually no cash. The rent gets paid in monthly and amounts withdrawn to live on. The pension company does nothing, the little cash is in the bank they specify, and they charge over £3,000pa in fees. My question is can I change this pension to a different type or with a different trustee to save money, or preferably, can I just not have the pension at all any more, and look after my own tax on the rent of the factory.

In my view there is a far more fundamental question to ask yourself and that is whether this illiquid asset is a suitable basis for long term pension income. I would also be concerned about the lack of a substantial cash buffer ( or near cash), in the event the property becomes vacant with no replacement tenant in sight.

A SSAS by its nature is a more complex entity to administer and stay within HMRC guard rails compared to a SIPP so attracts higher professional fees as a result. Frankly I do not sense you have the competency to run it by yourself.

My suggestion is to seriously consider selling the factory ASAP and transfer the proceeds to a far more straight forward SIPP investing in conventional stocks and shares.

In passing you and all over SSAS owners of commercial property should be especially concerned about the forthcoming IHT regime in 2027 affecting all DC schemes

. Although I suspect property based SSAS will probably benefit from the 10 yearly instalment option to pay IHT bills, it defeats the whole point of the pension as a resource for the surviving family if the future income stream is wholly employed in servicing IHT plus interest thereon. Worse still the rental income could be entirely inadequate to service the eventual IHT bill.

Time to review if your current arrangement still makes fiscal sense.

poseidon1 said:

pe567567567 said:

Briefly, I have a SSAS which was started years ago. I am now retired and the my company does not exist any more. There is a factory in the pension and  virtually no cash. The rent gets paid in monthly and amounts withdrawn to live on. The pension company does nothing, the little cash is in the bank they specify, and they charge over £3,000pa in fees. My question is can I change this pension to a different type or with a different trustee to save money, or preferably, can I just not have the pension at all any more, and look after my own tax on the rent of the factory.

In my view there is a far more fundamental question to ask yourself and that is whether this illiquid asset is a suitable basis for long term pension income. I would also be concerned about the lack of a substantial cash buffer ( or near cash), in the event the property becomes vacant with no replacement tenant in sight.

A SSAS by its nature is a more complex entity to administer and stay within HMRC guard rails compared to a SIPP so attracts higher professional fees as a result. Frankly I do not sense you have the competency to run it by yourself.

My suggestion is to seriously consider selling the factory ASAP and transfer the proceeds to a far more straight forward SIPP investing in conventional stocks and shares.

In passing you and all over SSAS owners of commercial property should be especially concerned about the forthcoming IHT regime in 2027 affecting all DC schemes

. Although I suspect property based SSAS will probably benefit from the 10 yearly instalment option to pay IHT bills, it defeats the whole point of the pension as a resource for the surviving family if the future income stream is wholly employed in servicing IHT plus interest thereon. Worse still the rental income could be entirely inadequate to service the eventual IHT bill.

Time to review if your current arrangement still makes fiscal sense.

poseidon1 said:

pe567567567 said:

Briefly, I have a SSAS which was started years ago. I am now retired and the my company does not exist any more. There is a factory in the pension and  virtually no cash. The rent gets paid in monthly and amounts withdrawn to live on. The pension company does nothing, the little cash is in the bank they specify, and they charge over £3,000pa in fees. My question is can I change this pension to a different type or with a different trustee to save money, or preferably, can I just not have the pension at all any more, and look after my own tax on the rent of the factory.

In my view there is a far more fundamental question to ask yourself and that is whether this illiquid asset is a suitable basis for long term pension income. I would also be concerned about the lack of a substantial cash buffer ( or near cash), in the event the property becomes vacant with no replacement tenant in sight.

A SSAS by its nature is a more complex entity to administer and stay within HMRC guard rails compared to a SIPP so attracts higher professional fees as a result. Frankly I do not sense you have the competency to run it by yourself.

My suggestion is to seriously consider selling the factory ASAP and transfer the proceeds to a far more straight forward SIPP investing in conventional stocks and shares.

In passing you and all over SSAS owners of commercial property should be especially concerned about the forthcoming IHT regime in 2027 affecting all DC schemes

. Although I suspect property based SSAS will probably benefit from the 10 yearly instalment option to pay IHT bills, it defeats the whole point of the pension as a resource for the surviving family if the future income stream is wholly employed in servicing IHT plus interest thereon. Worse still the rental income could be entirely inadequate to service the eventual IHT bill.

Time to review if your current arrangement still makes fiscal sense.

I have enough cash for more than 3 months average rental income, while looking for a new tenant, this has never stretched over 1 month previously. I don't want to sell the factory as it gives a 9% return, which is far more than we need to live on. I have no wish to run the SSAS on my own, although I'm sure I could with the info. I want to get out of the SSAS if possible. I will look into the changes (if any) in the budget and plan accordingly. As I said I would much prefer to be out and to treat the rent as income and look after our own taxes, or find a cheaper type of pension. As far as I can see the existing company only looks after the statutory tax situation regarding the pension, everything else is extra charges and seems very high.