Transfer SSAS to PRSA

C

cremeegg

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Some years ago I was a director of my own company and opened an SSAS pension scheme. Things changed and although previous pensions were transferred into the SSAS the company never made any contributions to the SSAS.

I had planned to invest in property through the SSAS but that will not now happen. So I wish to transfer the ISSAS to a PRSA for a lower cost structure.

The SSAS provider now wants to receive a contribution from the company before they allow the transfer to a PRSA.

This is a real difficulty/cost as the company is in the process of being closed down.

I would be glad if anyone could shed any light on this. It is difficult to understand why an additional contribution is required to close the SSAS.

many thanks for any info.
 
I can't think of any reason why an additional contribution would be needed prior to winding up a SSAS.

Would there be any fees due to the SSAS provider, or fees for the wind-up? It would be tax efficient if such fees could be discharged in the form of a company pension contribution. But if as you say, that poses difficulty for you, I can't see why the provider wouldn't agree to receiving their fees from you personally.
 
LDFerguson said:
I can't think of any reason why an additional contribution would be needed prior to winding up a SSAS.

Would there be any fees due to the SSAS provider, or fees for the wind-up? It would be tax efficient if such fees could be discharged in the form of a company pension contribution. But if as you say, that poses difficulty for you, I can't see why the provider wouldn't agree to receiving their fees from you personally.
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Thanks for that, I appreciate your response.

No one has said to me that it is anything to do with fees. The SSAS provider has been taking their annual fees from the pension pot, which is just money in a bank account, each year.

The requirement for a company contribution has been stated to be a Revenue matter.

It will mean a transaction in 2023 and so an audit and and audit fee for 2023.


This is what my broker is telling me.

XXX are just after emailing me saying that to wind up their scheme they need an employer contribution.

and

XXX confirmed that Revenue would require an employer contribution to me made to the SSAS.


XXX describe themselves as 'a professional pension trustee company, one of the largest providers of self-administered pensions in Ireland.'

I don't even know what questions to ask to try to probe this.
 
This happens quite frequently and is probably the “meaningful contribution” test for revenue approval.

If no employer contributions have been made it is “offside” with Revenue approval.
 
This is an interesting read.

I'd be interested to know what type of pensions you transferred into the SSAS, what fund/s they were invested in, what charges applied to those and when the transfers took place.

All this money has been sitting in a bank account since the transfer? Was there an inital charge on the transfer and what are the annual fees.?

I completely understand the intent (some years ago) but there are large numbers of pension savers who, based on the advice of an intermediary or some lad down the pub, transferrered to SSAS's in da boom and all that money is still sitting in cash.

I'm just wondering what's promted the move to PRSA now?


Gerard

www.prsa.ie
 
Marc said:
This happens quite frequently and is probably the “meaningful contribution” test for revenue approval.

If no employer contributions have been made it is “offside” with Revenue approval.
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This is it.

If you ever do a transfer with a life company, you need to make a contribution before they will accept the company transfer. SSAS will accept them without looking for a contribution. The rules are the same though.

There is no company contribution in this SSAS, so it shouldn't be holding any assets at all. I am not sure what the solution is beyond making a company contribution or unwinding the whole thing.


Steven
www.bluewaterfp.ie
 
Marc said:
This happens quite frequently and is probably the “meaningful contribution” test for revenue approval.

If no employer contributions have been made it is “offside” with Revenue approval.
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Thanks Marc. This appears to be what is involved. I found the revenue manual, which appears to be relevant. https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-04.pdf

What I still struggle with is that this has only be come an issue now that the SSAS is being closed.
 
GSheehy said:
This is an interesting read.

I'd be interested to know what type of pensions you transferred into the SSAS, what fund/s they were invested in, what charges applied to those and when the transfers took place.

All this money has been sitting in a bank account since the transfer? Was there an inital charge on the transfer and what are the annual fees.?

I completely understand the intent (some years ago) but there are large numbers of pension savers who, based on the advice of an intermediary or some lad down the pub, transferrered to SSAS's in da boom and all that money is still sitting in cash.

I'm just wondering what's promted the move to PRSA now?


Gerard

www.prsa.ie
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Many thanks for your response Gerard.

The main pension transferred was a PRB with Irish Life.

The charges are 1.5% per annum. I was made aware at the time that the charges were high in the SSAS structure which allowed an investment in property.

The idea of moving to a PRSA now is because the idea of investing in property is gone, the PRSA is a lower cost and more suitable structure. This is what I am told and have accepted at face value.

The idea is to invest in Aviva European Equity ESG Passive Fund although as there is free movement within funds I don't see this as crucial.
 
Steven Barrett said:
This is it.

If you ever do a transfer with a life company, you need to make a contribution before they will accept the company transfer. SSAS will accept them without looking for a contribution. The rules are the same though.

There is no company contribution in this SSAS, so it shouldn't be holding any assets at all. I am not sure what the solution is beyond making a company contribution or unwinding the whole thing.


Steven
www.bluewaterfp.ie
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Thanks Steven,

What exactly would unwinding the whole thing involve. I want to close the SSAS. Could that mean purchasing a PRB ? Or would it mean paying out the funds to me, and my paying TAX on that as income. Disaster !

When you say 'it shouldn't be holding any assets', this makes sense, if the meaningful contribution is needed why is this only an issue now I want to close the SSAS, surely it should have been an issue when the SSAS was opened.
 
cremeegg said:
Thanks Steven,

What exactly would unwinding the whole thing involve. I want to close the SSAS. Could that mean purchasing a PRB ? Or would it mean paying out the funds to me, and my paying TAX on that as income. Disaster !
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Unwinding is reversing the whole thing back to the original pension. It is something that I have heard threatened and talked of. I have never experienced one actually being done due to how messy it is.

cremeegg said:
When you say 'it shouldn't be holding any assets', this makes sense, if the meaningful contribution is needed why is this only an issue now I want to close the SSAS, surely it should have been an issue when the SSAS was opened.
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Yes, it should have been addressed at the beginning. Insurance company's won't take transfer values from other company schemes without a contribution first. It might only be €100 but a company contribution has to be made. Self admin pensions seem to let these things slide a bit more.

Steven
www.bluewaterfp.ie
 
This is not a situation I've run into before and I'm curious. Any pension transfers we've arranged in the past have always required that the receiving scheme sends written confirmation to the transferring scheme that the receiving scheme has Revenue approval. Did the SSAS receive Revenue approval without any contributions being made?
 
LDFerguson said:
This is not a situation I've run into before and I'm curious. Any pension transfers we've arranged in the past have always required that the receiving scheme sends written confirmation to the transferring scheme that the receiving scheme has Revenue approval. Did the SSAS receive Revenue approval without any contributions being made?
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Thanks Liam, this is a question that I can ask the broker.

Is there any reason I should not ask my broker to request the pension trustee company to confirm that my existing SSAS has revenue approval.

Separately I wonder is it realistic for me to ask that they pay the audit fee. If they had asked for the contribution at time of set up it would not have cost anything except the contribution itself.
 
Steven Barrett said:
Unwinding is reversing the whole thing back to the original pension. It is something that I have heard threatened and talked of. I have never experienced one actually being done due to how messy it is.
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I would have no issue going back to an Irish Life buy out bond. Would that be messy for them or for me.
 
Marc said:
As I say, quite a regular occurrence. Many brokers haven’t a bogs notion how pensions work at the level of the revenue pensions manual.

You really do get what you pay for
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My understanding is that it is the pension trustee company is the one who should be getting Revenue approval, is that right.

I am paying the broker 0.25% per annum. I don't know how that compares.
 
cremeegg said:
My understanding is that it is the pension trustee company is the one who should be getting Revenue approval, is that right.

I am paying the broker 0.25% per annum. I don't know how that compares.
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Revenue won’t allow the pension trustee, I assume it’s ITC, to wind up a SSAS without a meaningful contribution (say €500) being made prior to scheme wind up.

If they try to Wind Up the scheme and submit final accounts without the meaningful contribution, the Revenue will write back withdrawing approval and request return of tax relief from the client granted previously on the transfer value proceeds.

The risk here is also that the trustees could resign which would leave you in a whole heap of pain.

0.25%pa sounds very “brokery” for ongoing advice
 
Marc said:
Many brokers haven’t a bogs notion how pensions work at the level of the revenue pensions manual.
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I can see nothing in this thread that suggests that cremeegg's broker doesn't have a bog's notion. But I do wonder why the trustee accepted a transfer into the SSAS if a meaningful contribution hadn't been made. Life companies won't do that.
 
@cremeegg

The point I was trying to make was, if you're transferring to a structure that's 0.75% pa or less then that seems okay. But, if you're transferring from a 1.5% AMC contract to a 1% PRSA then that wouldn't seem fair to me, because the 1% PRSA was available all along.

In any event, it looks like your're snookered because of the Revenue rule and the only way I can see that's not going to cost you is to insist that it's undone and revert to the PRB (without new/additional charges). It's going to cost the broker and provider but that shouldn't be your concern. If you were in Cash all along then you've probably been losing about 2% pa so a reversal should make you whole again.

I haven't come across, or dealt with, a situation like this before but throwing it back on the provider/broker seems sensible. This assumes that you were never informed of the obligation to make a contribution.

All providers/brokers make mistakes. It's a fact of life. It's how they react to them (acknowledgement) and handle them that counts. No one is exempt, no matter how many letters they have after their name.

Gerard - NoLettersAfterMyName

www.prsa.ie
 
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LDFerguson said:
I can see nothing in this thread that suggests that cremeegg's broker doesn't have a bog's notion. But I do wonder why the trustee accepted a transfer into the SSAS if a meaningful contribution hadn't been made. Life companies won't do that.
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Well this shouldn’t come as a surprise to the client. The broker set it up and should have ensured the contribution was made from the outset. It’s mandatory after all. What type of advice involves recommending a company pension plan with no employer contribution? What’s the broker getting paid for afterall? Very “brokery” as Marc says.

I would also bet that the broker was advised of this when the transfers were accepted. Ie the transfers are only been accepted on the assumption that the contribution would be made. I would even go as far as saying that the administrator raised this issue on an annual basis with the production of the annual accounts.

Anyway, This doesn’t really help cremeegg. I think you must advise the trustee that the company is gone and look to wind up the scheme. Try and figure out if this is the first time this has been raised with you or the broker. If it is then the trustee has some of the blame. Due to the regulatory environment I would imagine that the trustee would be happy to wind up the scheme so they should work with you here. The scheme is offside so best to get it wound up asap.
 
Aviva European Equity ESG? I can’t find the fact sheet to this but is this European equities only?

The goal should be to find an investment solution that best fits your needs and then implement in the most cost efficient way. It shouldn’t work the other way around.

PRSA aren’t cheaper either. They are generally the dearest pension on the market so not sure why you were told this.

I think you should critically review the advice. Appreciate that I haven’t the full picture it could well the product for you.
 
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