Trustee is closing my SAPS - what are my options?

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sublime1

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I'm a small business owner who set up a SAPS executive pension last year. The trustee was making noises for a while about the difficulties of navigating the IORPS II regulations and now they are telling me that they are shutting down my SAPS. I'm pretty upset at this news, especially as some of the investments I made are down in value, and I will have to sell at a loss if I sell now. My fury at the incompetence of the Irish Pensions Authority goes without saying. What is wrong with this country?

I'm probably too emotional about this right now to be thinking clearly, but would be very grateful to get some guidance of my next steps.
 
I empathise with your frustration. This could have been handled so much better by the powers that be.

The good news is that you may not need to sell your investments. You can replace your SSAP with another self-administered pension product and arrange for the transfer of the existing assets from the old to the new without selling them. In the industry jargon, that's known as an in-specie transfer.

Your product options now are Buy-Out Bond or PRSA to accept the assets from your existing SSAP and PRSA for future contributions (with a far lower allowable limit for contributions than the SSAP.) Whoever was advising you on setting up the SSAP should be able to advise you now on which replacement vehicle is best suited to your particular requirements.

Regards,

Liam
www.FergA.com
 
LDFerguson said:
I empathise with your frustration. This could have been handled so much better by the powers that be.

The good news is that you may not need to sell your investments. You can replace your SSAP with another self-administered pension product and arrange for the transfer of the existing assets from the old to the new without selling them. In the industry jargon, that's known as an in-specie transfer.

Your product options now are Buy-Out Bond or PRSA to accept the assets from your existing SSAP and PRSA for future contributions (with a far lower allowable limit for contributions than the SSAP.) Whoever was advising you on setting up the SSAP should be able to advise you now on which replacement vehicle is best suited to your particular requirements.

Regards,

Liam
www.FergA.com
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Hi Liam, just a question...do all trustees charge vat on the amc...I thought financial services were vat exempt.
 
50thbirthday said:
Hi Liam, just a question...do all trustees charge vat on the amc...I thought financial services were vat exempt.
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Yes VAT on the annual trustee fee is common. I don't know why it isn't exempt. Perhaps one of the accountants on the board here might be able to answer that one.

Thinking about it, I've seen self-administered vehicles where the annual charge to the trustee doesn't attract VAT, e.g. self-administered PRSAs. This might have something to do with the fact that on a self-administered PRSA, the payments to trustee and broker are deducted from the fund and paid in the form of commission (similar to a traditional insurance company PRSA). Perhaps it's the method of delivery of the payment that makes the difference - commission payments; no VAT but direct payment from customer to trustee; VAT. I'm only speculating.
 
LDFerguson said:
Yes VAT on the annual trustee fee is common. I don't know why it isn't exempt. Perhaps one of the accountants on the board here might be able to answer that one.

Thinking about it, I've seen self-administered vehicles where the annual charge to the trustee doesn't attract VAT, e.g. self-administered PRSAs. This might have something to do with the fact that on a self-administered PRSA, the payments to trustee and broker are deducted from the fund and paid in the form of commission (similar to a traditional insurance company PRSA). Perhaps it's the method of delivery of the payment that makes the difference - commission payments; no VAT but direct payment from customer to trustee; VAT. I'm only speculating.
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VAT only applies on SSAS's and not Buy Out Bonds, PRSAs or ARFs. I don't know why. Then there is the argument that any ongoing commission paid to the advisor should be liable to VAT as it pays for ongoing service and advice. At this point of time, the Revenue haven't imposed it.

As for the OP, transfer it to a Buy Out Bond or PRSA. You cannot make further contributions to the Buy Out Bond.

Speaking to one of the broker consultants last week, apparently the Pensions Authority told his company that they would allow executive pensions written under a master trust. It is a matter now for the life companies to design a suitable product that will take a number of months. All these products must have a 100% allocation, so commission charging advisors may have to pivot to fee. Not a bad thing.


Steven
www.bluewaterfp.ie
 
LDFerguson said:
If you mean the new IORPS II regulatory requirements, that only applies where the scheme was in place before 22 April 2021.
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I have an ssap set up before April 2021 and active. Are the new regs applicable to this scheme...I'm of the opinion that my SSAP is exempt until 2026. Is that right??
 
50thbirthday said:
Thanks Stephen. Would I be right in saying that my trustees should not be charging extra fees on top of my agreed AMC at this stage, as there are no extra works required until 2026.
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Not necessarily. There are additional trustee obligations being added. and as we have seen from the Pensions Authority, these could come into place at any time. If there is an increase in fees, your provider will explain what it is for first. I don't think we will see a situation where one company is not charging and others are. The costs are going to be across the board.
 
Yes, they say its to do with all the additional work required under IORPS2.....which my SSAP is exempt from at this stage, so I don't see why the additional fees are been asked for. Its like an Architect asking for fees for next years updated building regulations. I thinks its just a way to drum up new fees.
 
50thbirthday said:
Yes, they say its to do with all the additional work required under IORPS2.....which my SSAP is exempt from at this stage, so I don't see why the additional fees are been asked for. Its like an Architect asking for fees for next years updated building regulations. I thinks its just a way to drum up new fees.
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Believe me, it's not. I speak to these guys all the time and they are all aware of how price sensitive the market is. It is not something that they do lightly. If they just wanted to drum up new fees, they could have used inflation as an excuse. There are additional trustee obligations in place now, not everything is exempt until 2026.
 
Steven Barrett said:
Speaking to one of the broker consultants last week, apparently the Pensions Authority told his company that they would allow executive pensions written under a master trust. It is a matter now for the life companies to design a suitable product that will take a number of months. All these products must have a 100% allocation, so commission charging advisors may have to pivot to fee. Not a bad thing.


Steven
www.bluewaterfp.ie
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Hi Steven, will this include single person EPP’s?
Did you get the impression it could be a few months or closer to a year?
 
Does anyone know if there’s any further update on a time frame for one person EPP’s being offered again? Or we still waiting for news?
 
Expect new single member schemes available under a master trust next month.

The open architecture options are likely to become less common with only insurance companies having deep enough pockets to pay for all the legal work.

This will ultimately increase costs, reduce choice and reduce transparency in the market.

Not a great outcome for the consumer it has to be said
 
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