The small self-administered scheme (SSAS) market has been part of the pension landscape for decades, but it does not always get the attention it deserves.
That’s probably what prompted many of us in the industry to make some noise when it came to the government’s general levy consultation towards the end of last year.
Let’s face it, the consultation made no specific reference to SSAS and yet plenty of us were talking about the potential ramifications the preferred option put forward could have on the sector.
The very fact there was no mention of SSAS was part of the problem. Had it been overlooked?
Did we create a mountain out of a molehill? Did we make it a SSAS issue where there wasn’t one?
The very fact there was no mention of SSAS was part of the problem. Had it been overlooked? Was it simply an oversight? Or was it a case of attempting to solve one issue over here, while inadvertently creating another one over there?
And with no clarification from above, those of us who could see the possible pitfalls of the proposals were left with little choice but to speak up.
The consultation highlighted the ongoing deficit in levy funding and set out options to mitigate this over the next three tax years from 2024-2025 through to 2026-2027.
There are many of us passionate enough to defend the SSAS industry when push comes to shove
Option one proposed to continue with the existing levy rates and levy structure. But there was no getting away from the fact this would see the deficit continue to grow and would require greater rises further down the line.
Of the 287 responses the consultation received, only four preferred this option.
The second option of retaining the current levy structure and increasing rates by 6.5% per year for all schemes proved significantly more agreeable, with 278 responses citing it as the preferred option.
The government has amended the preferred approach accordingly and this option was implemented from 1 April.
It was the third option – the government’s original preferred option – which sparked the cause for concern.
I’ve noticed a few advisers take to social channels to ask their peers where they can find a decent SSAS provider
This would have seen rates for all scheme types increase by 4% per year with an additional premium of £10,000 for small schemes with a membership under 10,000, excluding defined benefit schemes in 2026-27.
Consolidation is likely to have followed. Whether that would be best for the market and pension members is an ongoing debate. As the government notes, several responses agreed consolidation was a positive move for the pension industry.
But the consensus was certain elements would need to be changed to make it appropriate and questions were raised around whether schemes would be able to meet the premium payment deadline.
Only three responses preferred option three. “This option has therefore not been chosen at this time,” the government said. Which, of course, means it could come back into play at a later stage.
Some of you may not have had the need to give SSAS much thought beyond answering a couple of questions in the R04 exam
Meanwhile, two responses disagreed with all options proposed.
Those who put option three down as their preference commented that consolidation will allow small schemes to properly govern their schemes. However, some suggested it might not be appropriate for this level of additional premium to be universally applied across all scheme types.
And there were considerations that the premium would “take away a vital part of the pension market” through damaging SSASs. Some argued it would be counter to the government’s policy to grow small businesses and would, in effect, take them out of the market.
The government sought to clarify a couple of points at this stage – “the premium, were it to have been taken forward, would have only applied to defined contribution schemes”.
It also outlined “the aim of the £10,000 premium was not to penalise SSASs or schemes with low membership, more to encourage the best value for money for members”. At least SSAS got a brief mention in the response document.
Pensions are complex, even for those of us in the know. Don’t rule out SSAS just yet
So where does the market go from here? Clearly, there are many of us who are passionate enough to defend the SSAS industry when push comes to shove. Maybe we need to be more vocal about the benefits and not afraid to speak up more often.
Because, for many clients, a SSAS could go some way to provide better retirement outcomes and that’s a goal we can all get behind.
But I get the impression several advisers don’t know which way to turn. Recently, I’ve noticed a few take to social channels to ask their peers where they can find a decent SSAS provider.
It suggests a need to build more trust in the market. Is that what the government aims to achieve with its fewer better run schemes mantra? Does it hope the cream will rise to the top?
Advisers need to be confident in how a scheme is going to be run and administered before they recommend it to their clients.
Be honest, when was the last time you discussed a SSAS product with a client? It’s not something that crops up all the time.
Some of you may not have had the need to give SSAS much thought beyond answering a couple of questions in the R04 (Pensions and Retirement Planning) exam.