Moving a SSAS to SIPP – case study
26 August 2019
David Bonneywell, director, Talbot and Muir, presents a case where two company owners want to transfer out their SSAS into separate SIPPs but find their current Trustee company is less than obliging
Bill Jones and Jane Smith have decided to sell their business as Bill is considering retiring. Jane, whilst wanting to continue to work, would like to have less day-to-day responsibility.
They have been running their small tooling manufacturer for a number of years and have found a buyer that wants to continue to grow the business and keep on their current employees. It is important to the employer to keep the current trading premises however, they would not want to purchase the site at this moment in time.
They have been discussing their pension options with their financial adviser James. Currently Bill and Jane are members of the company sponsored small self administered scheme (SSAS).
The SSAS currently owns the business’s trading premises as well as other managed investments and cash holdings.
The SSAS has been in existence for a number of years and whilst initially Bill and Jane were happy with the Professional Trustee since the original company had been sold three years ago they were becoming increasingly frustrated. All personal contact had been replaced with a call centre mentality and the final straw for Bill had come recently when he was informed his enquiry as to potentially drawing some of his lump sum entitlement was in a “queue” and he could expect a response in 10 days.
Both Bill and Jane wish to continue to own the company’s trading premises within their pension ‘pot’ however, due to their differing ages and outlook on investment risk and income requirements, they feel now would be a good time to split the fund.
After a full fact find and a number of meetings with Bill and Jane, James recommends transferring their current SSAS into two SIPPs. This would enable both scheme members to continue to own a percentage share of the property but have full autonomy over the running of the other assets within their pots and ultimately the drawing of benefits and associated succession planning.
The existing Professional Trustee and administration company is also a SIPP provider however, both Bill and Jane were not keen to remain with this firm due to the woeful administration service they had received in both the day-to-day running of the scheme and in particular all property related matters. James too concurred this had also been his experience with a number of other clients.
It was agreed that James would get a quote for the transfer of the scheme assets to SIPPs with another SIPP provider who specialises in property and is known for their high administration standards. It seemed an unnecessary and costly exercise to transfer the SSAS to then transfer to SIPPs.
Bill, Jane and James were horrified to receive a quote in excess of £4,000, which didn’t even include any legal work for the transfer of the property. In addition, estimated timescales to facilitate the transfer were said to be six months. James was asked to look into the immediate transfer of the SSAS as both Bill and Jane felt they were being held to ransom.
James discussed the matter with his preferred SSAS and SIPP provider and agreed a fee of £2,500 for the takeover of the existing SSAS, establishment of two SIPPs, transfer of assets and ultimate wind up of the SSAS. This was subject to satisfactory due diligence being undertaken on the scheme property and any SSAS assets being transferred in specie.
Once the SSAS had been transferred, James was advised the transfer to SIPPs would be a matter of weeks.
Bill and Jane instructed James to proceed with the transfer/takeover of the SSAS to his preferred provider. In just over 2 months, the whole process had been completed with a significant saving on initial fees quoted.
Having now been in regular contact with their new pension administrators, and having met the company’s representative with James on two occasions, Bill and Jane have only one regret… they didn’t move sooner!
Origo is to launch Unipass Letter of Authority (ULoA) at the end of November, a service aimed at simplifying...
Professional Paraplanner’s publisher, Research in Finance (RiF), is a leading research company in the financial services sector. On occasion our readers...
While the aggregated costs and legacy trail commission regime remains far from perfect, some clarity can be gleaned, says...