Pension Schemes - Frequently Asked Questions

 

Establishing a Scheme

Establishing And Maintaining An Occupational Scheme

Q. Can I get a Small Self Administered Scheme (SSAS) tax approved on my own without any professional involvement?

A. No. A SSAS is required, under tax law, to appoint an independent trustee - known as a Pensioneer Trustee. This is an individual or body recognised by the Inland Revenue as being widely involved with SSASs and who has dealings with the SPSS. In relation to a scheme where they are appointed to act as the Pensioneer Trustee, they undertake to the Inland Revenue not to consent to any termination of the scheme which is not in accordance with the tax approved scheme rules.

Additionally an actuarial valuation report will need to be prepared when the SSAS is established and, at least, 3-yearly thereafter. These reports make recommendations about the contributions that can be paid into the scheme and must be completed by a qualified Actuary.

You can obtain further information on Pensioneer Trustees and Actuaries from their representative bodies, whose addresses can be found in the useful addresses and telephone numbers section.
The SPSS is unable to offer further advice regarding the setting up of a SSAS except to clarify our published practice (please see Practice Notes IR12 (2001) chapters 18 & 20 on this website).


Q. Do Death In Service Only Schemes have to include the new rules for Pensions & Divorce?

A. If a scheme that only provides death-in-service benefits has provisions that allow for the payment of a pension to the widow/widower/dependent(s) of a deceased member, pension sharing on divorce provisions will be required as a condition of tax approval.

This is because the maximum permissible pension for the widow/widower/dependant(s) is based on the maximum pension that could have been paid to the deceased member. If the deceased member's pension benefit rights had been subject to a pension sharing on divorce order in respect of another scheme of the employer - an "associated scheme", the effect of that order might be such that the maximum permissible pension benefit that could have been paid to the deceased member is permanently reduced. This needs to be reflected in the limitation rule of the scheme that only provides death-in-service benefits.


Establishing and Maintaining a Personal Pension Scheme

Q. What is a SIPP and can I set one up myself?

A. A SIPP is a self-invested personal pension scheme. It is essentially the same as any other type of personal pension, the only difference being that you can direct the pension scheme provider to make certain investments of your choice. Prohibited investments include residential property and any transaction with a connected party. Details of other Inland Revenue restrictions can be obtained from the SIPP provider. For further details of what constitutes an authorised pension provider, please see the definition in Appendix 1 of the IR76(2000) which is available on the Internet.


Establishing and Maintaining a Public Sector Scheme

Q. I work for a local authority and I have an employer who wants to participate in the Local Government Pension Scheme (LGPS). How do they go about it?

A. Each council holds its own separate fund in the LGPS and can have employers participating in these funds if they wish. Historically, all the employers participating should be "associated" in some way but we are aware that a lot of those already participating are not associated. In recognition of this a non- associated section has been set up within each fund.

It is not for this office to advise whether an employer is associated or non-associated. General guidance is given at Part 21 of our Practice Notes. If you want an employer to participate in the scheme you should decide which section of the fund they are to participate in and send us an appropriately completed PS274. We will then consider the participation and let you know if it is acceptable.

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