Arranging corporate pensions will provide both you and your employees with valuable benefits in retirement.

The right solutions can also help keep your business running successfully, ensuring you remain compliant and providing funds for your business’s development.


Automatic enrolment

If you’re a business owner in the UK, the chances are you’ve heard about automatic enrolment (also known as auto-enrolment) – but what does this mean to you? You’ll need to follow certain rules in order to stay compliant with The Pensions Regulator.

What is auto-enrolment?

Auto-enrolment makes it compulsory for employees to put into place a qualifying workplace pension, and ‘automatically enrol’ their eligible workers. Employers will then have to make contributions to their workers’ pensions every pay period.

When will auto-enrolment affect me?

The deadline for when your auto-enrolment duties come into effect is known as your ‘staging date.’ This is set by The Pensions Regulator and will depend on the size of your business. Very large employers were the first to reach their staging date in late 2012, and now small and micro-employers must do the same.

You should set up a workplace pension scheme before your staging date, as you could face heavy fines for failure to comply. Find out your staging date ahead of schedule by visiting The Pensions Regulator, all you’ll need is your PAYE reference number to do so.

An independent financial adviser can put a qualifying pension scheme in place for your business, so you don’t have to worry about deadlines. Once this is done we can regularly review your scheme to ensure you remain compliant with the rules set by The Pensions Regulator and avoid unnecessary penalties.

Who do I need to enrol?

You’ll need to know which members of staff to enrol by the time your staging date arrives. Auto-enrolment will only apply to certain members of staff, depending on their age and earnings. Other staff can ask to be enrolled, and you may or may not have to pay contributions for them.

Each member of staff will fall into one of three categories; eligible, non-eligible and entitled. You should complete an assessment of your workplace early to determine which group each person fits into.

Eligible staff
This group must be automatically enrolled and you must pay minimum contributions. They are UK workers who; 

  • Are aged between 22 and the State Pension age
  • Earn at least £10,000 a year (the government will review this figure each year)
  • Aren’t already in a qualifying workplace pension scheme

Non-eligible staff
This group can ask to be enrolled into the scheme and if they do, you must pay minimum contributions. They are UK workers who are either;

  • Aged between 16 and 22, or between State Pension age and 74 and earn more than £10,000 in a year, OR
  • Aged between 16 and 74 and earn at least £5,824 but less than £10,000

Entitled staff
This group can also ask to join the scheme, although you will not have to pay contributions. Entitled workers are those aged between 16 and 75 who earn less than £5,824 a year.

Be sure to use the latest figures when assessing your employees. Government rules are reviewed each year and could change. The figures above are for the 2017/18 tax year. 

How much do I have to contribute?

There are minimum standards in place when it comes to auto-enrolment. For most employers, this means paying minimum contributions into their employees’ pension, although an employer can choose to contribute more than the statutory minimum. Minimum contributions start at 1% of a worker’s “qualifying earnings” and is set to increase to 3% over the next few years. 

Qualifying earnings does not refer to all of a worker’s salary, but applies to earnings over a minimum amount (currently £5,876) and up to a maximum amount (currently £45,000). These figures apply to the 2017/18 tax year.Schemes are going to vary in terms of fees, expenses and investment approach. If you need help setting up auto-enrolment for your business, an independent financial adviser can search the whole of the market to find the best possible solution for you, and ensure you remain compliant.

How do I choose the right pension scheme?

Schemes are going to vary in terms of fees, expenses and investment approach. If you need help setting up auto-enrolment for your business, an independent financial adviser can search the whole of the market to find the best possible solution for you, and help you to remain compliant.

Small Self-Administered Scheme (SSAS)

What are the features of a SSAS? 

  • A SSAS can be used to make loans to the sponsoring employer
  • Funds can be used to acquire commercial property, including the sponsoring employer’s business premises
  • Members have considerable flexibility and control over investment policy and underlining assets - this also means more responsibility
  • Employer and member contributions may qualify for tax relief
  • Investment income and gains (other than dividend income) are generally exempt from income tax and capital gains tax
  • Depending on the scheme's circumstances, members can usually take a tax-free lump sum of up to 25% of their share
  • Lump sum benefits on a member’s death will are generally free of inheritance tax
  • Fees for administration can be paid for by the sponsoring employer and treated as a business expense

The value of investments and the income derived from them may go down as well as up. Tax reliefs are dependent upon personal circumstances, and pension and tax rules are subject to change by the government. 

What is a SSAS?

A Small Self-Administered Scheme (SSAS) is a type of occupational pension scheme established for the directors and senior employees of a business. It’s set up under trust by the sponsoring employer for the benefit of the scheme members. There should be no more than 11 members, and each member acts in the role of trustee.

Each SSAS will require a scheme administrator whose responsibilities will include; registering the scheme with HM Revenue & Customs (HMRC), reporting to HMRC events relating to the scheme and the scheme administrator, and undertaking tasks to maintain the beneficial tax status of the SSAS. 

Previously, a SSAS required the appointment of a professional trustee, although this is no longer the case. However, it’s still highly recommended that you employ the service of an independent trustee who has expertise in legislation and HMRC practice. Some professional trustees will also act as scheme administrator and prevent member trustees from making unauthorised payments and breaching tax regulations.

How does a SSAS work?

Once a SSAS has been established and registered with HMRC, funds can be paid into the account by contributions from the sponsoring employer, contributions from members, and transfers from members’ other pension schemes, where those members may benefit from increased flexibility. The funds will be invested in line with trust law with the aim to achieve growth.

Each member will have a ‘share,’ or interest, in the SSAS fund. This will depend on the contributions and transfers paid in by, or on behalf of a member, their share of any investment growth (or loss) and any relevant payments made from the SSAS for them. The amount of benefits that a member can receive will depend on the value of their share of the SSAS fund at the time they decide to take the benefits.

Loans

A SSAS can make a loan to the sponsoring employer. This can be a maximum of 50% of the net value of the assets, minus any existing loans, with a maximum term of five years. This loan can be used for most purposes, including cash flow and funding company acquisitions. Loans to unconnected third-parties, where a sound investment proposal exists, may not need to be secured. Your adviser will be able to discuss this with you further.

Commercial property

The funds in a SSAS can also be used to acquire commercial property. This can include the sponsoring employer’s business premises, which can then be leased back to the employer. Not only does this inject valuable cash flow into the business, but provides a regular income which is free from income tax. There are a number of other advantages to holding property within a SSAS, including tax relief on any contributions used to purchase the property.

A SSAS will not be suitable for all investors. You should speak to one of our independent financial advisers if you have any questions, as they will be able to search the whole of the market to find the best possible option for you and your business.



Group SIPP

What are the features of a group SIPP? 

  • Members of a business can pool their funds together to buy a property, rather than each person having to buy their own share. This can include their existing business premises or a new premises
  • By pooling together funds, individuals can gain access to investments which may not be available to them if they were acting on their own
  • Members have considerable flexibility and control over investment policy and underlining assets - this also means more responsibility
  • Contributions may qualify for tax relief
  • Investment income and gains (other than dividend income) are generally exempt from income tax and capital gains tax
  • Members can usually take a tax-free lump sum of up to 25% of their share
  • Lump sum benefits on a member’s death will generally be free of inheritance tax

The value of investments and the income derived from them may go down as well as up. Tax reliefs are dependent upon personal circumstances, and pension and tax rules are subject to change by the government.

What is a group SIPP?

A group SIPP (Self-Invested Personal Pension) pools together the pension assets of its members for investment purposes. A typical group SIPP is likely to consist of the partners or directors of a business who wish to purchase a commercial property. This may be their existing premises, or a new one. A group SIPP can also be used for other investments.

How does a group SIPP work?

Each member has their own account within the group SIPP that will be individually registered with HMRC, but all assets are combined into a single fund. A member’s initial share in the fund, their investment returns and associated costs will be based on what they pay in.

Individuals can make further contributions or transfer payments, and take funds out as a tax-free lump sum or pensions when they draw benefits. Each individual’s share in the fund will be re-calculated each time this happens. A group SIPP only operates as a pooled fund, so individual investment is not possible.

If the advantages of pooling together assets are not needed, then other pension arrangements may be more suitable. You should speak to one of our independent financial advisers if you have any questions, as they will be able to search the whole of the market to find the best possible option for you and your business.

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