SIPPs
*Funded through relief at source
*SIPP is a contract based individual registered pension scheme regulated by the FCA
*Wide investment choices including into commercial property (which does not include buy to let), tax free rent (including your own) & can group SIPPs together to do so
*Can borrow loan on commercial terms but NOT to connected parties. I.e. your employer, or to you the member
*Can purchase shares in employer with no restrictions
*Member must receive an SMPI annually
*can borrow 50% of net scheme value but NOT to connected employers
SSAS (Small Self-Administered Scheme)
*A trust based occupational scheme governed by a trust deed where all (max 11) members are trustees - regulated by TPR as an occupational scheme
*Assets are pooled so there is no individual earmarking
*Wide investment choices including commercial property, the ability to borrow or lend to unconnected parties AND sponsoring employers
*Can invest up to 5% of assets in a sponsoring employer which could equate to 100% of employers shares (subject to a max of 20% across multiple sponsoring employers)
*Can borrow 50% of net scheme value - only SSAS can loan to sponsoring employer
SSAS loan rules to a sponsoring employer
*Max loan = 50% NET scheme assets
*max 5 year loan term to sponsoring employer and can only be rolled over once
*must be secured on a non-depreciating asset
*repayments must be level and at least annual with minimum interest at least 1% above BoE base rate
Section 32 Policy (Buy-Out bond)
*Used to accept transfers from contracted out DB schemes where GMP was included in the CETV
*Meant that a member could keep their GMP guarantees even if they were transferring from a DB to a DC scheme. Simply registered the Section 32 policy with an insurer separate to their pensions
*Any GMP still cannot be used to increase tax free cash
*If member dies with GMP, a 50% dependants pension must be provided (instead of a lump sum)
DC short service refunds and transfers
*DC members who joined before 1 October 2015 get their own contributions as refunds if leaving within 2 years
*DC members joining after refunds only allowed if leaving within 30 days, otherwise no refund. Benefits must be preserved
*after 3 months scheme must offer a transfer value if you were to leave
EPPs (Executive personal pensions)
*Designed for directors and snr execs
*DC grouped personal pensions that gives higher employer contributions than jr staff
*each members fund separately identified
*Since A-Day EPPs same contribution and benefit rules as personal pensions (so not as popular)
Retirement Annuity Contracts (RACs)
*Pre-1988 individual personal pension (replaced by PPPs in 1998)
*Often included GARs
*Death benefits usually limited to a return of contributions (not the fund value)
*Individual DC contract, not a workplace scheme
Statutory Money Purchase Illustrations (SMPIs)
*Must be issued annually for ALL DC arrangements except for:
- retirement annuity contracts
- SSAS schemes where all members are trustees
Master Trusts
- regulated by TPR
- run by trustees (no IGC)
*Subject to TPRs voluntary assurance framework - SMPI required
Contract based schemes
- Regulated by FCA
- Ran by 3rd party (no trustees)
- Must have IGC
SMPI required
*Class trap group personal pension schemes provided by employer
Targeted Money Purchase Scheme
*Hybrid DC scheme with a target benefit level (not guaranteed)
*No guarantee, benefits depend on DC assets
*Trustees cannot claim back on employer assets unless contributions are in arrears to fund scheme (unlike DB)
Annuity protection lump sum
- only comes from DC scheme pensions
SIPPs
*Contract based DIY individual pension with wide investment choice
- Can invest in commercial property (not buy to let)
- Can group SIPPs to buy property together
- Cannot lend to connected parties
- Up to 50% net scheme value can be borrowed - not from connected parties
- Can buy shares in an employer
SSAS’
*Trust based (11 trustees max), built for business, regulated by TPR
- Assets are pooled, no indv earmarking
- Wide investment powers, commercial property (not buy to let)
- Can invest up to 5% assets in a sponsoring employer (up to 20% if multiple companies)
- Rental income within a SSAS roll up tax free
- costs and admin higher than a SIPP
Can loan back to an employer if:
- Secured on a non-depreciated asset
- Max term 5 years (can rollover once)
- Level repayments, at least annually
Minimum interest 1% above BoE base rate
Stake holder pension charges (not employer pension charges)
1.5% first 10 years then 1%
HMRC ‘benefit value’ calc of capped drawdown plans pre 2006
25 * income * 0.8
A Group personal pension plan is
*always a contract based scheme
*So Relief at source and can still contribute to it after leave employment
