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Pension Question

Discussion in 'General Discussion' started by Gaidin109, 22 Apr 2010.

  1. Gaidin109

    Mobster

    Joined: 12 Jul 2009

    Posts: 4,878

    If Company Directors own property and have the rent from those properties and the pension contributions from their employer paid into a Pension Trust which is in the name of three of the Directors. The scheme is only available to three of the five Directors and is not open to any other employee within the company.

    What are the obligations of the company as a whole regarding the administration of the pension fund?

    Is the Company responsible for running the pension fund or is it the responsiblity of the trustees, (the three directors).

    Can the company charge fees to the pension fund for adminstrative work such as filing VAT returns, preparing accounts etc?


    (this question was submitted by my Wife, not me)
     
  2. i know nothing

    Mobster

    Joined: 6 Feb 2004

    Posts: 3,410

    Location: Norfolk Broads

    How old is this pension scheme? There used to be a 20% rule (i.e. if a director owns more than 20% of the equity) that you may have to take into account. The pension scheme should have trustees appointed but the administration will be done by a life insurance company who will of course charge a fee. The life insurer will advise the trustees what they can and cannot do and yes the trustees are the ones responsible. Each trust has a set of rules which the trustees must abide by, it tends to differ. If your wife is one of the beneficiaries/trustees then she should have access to these.
     
  3. The_Abyss

    Capodecina

    Joined: 15 May 2007

    Posts: 12,805

    Location: Ipswich / Bodham

    It doesn't have to be a life insurance company. Any decent SIPP or SSAS administrator will be able to do this. They will fulfil the regulatory and legal obligations.

    Trustees will be responsible, and yes, provided the costs are equitable and wholly related to the activities of the pension fund, they can be charged.

    Big flag on the 20% equity rule though - sounds like they could already be in breach.
     
  4. Gaidin109

    Mobster

    Joined: 12 Jul 2009

    Posts: 4,878

    From what I can gather, there has been a shuffle in the boardroom, the pension trustees are the three directors who have been shuffled. The company executive don't want to use their resources to administer the fund ie, vat returns, end of year accounts etc. The three trustees/directors say that as the primary company they are responsible for the admin and the costs involved.

    Only those three directors are contributors/beneficiaries of the fund. It is closed to everyone else within the company who have other arrangements.
     
  5. The_Abyss

    Capodecina

    Joined: 15 May 2007

    Posts: 12,805

    Location: Ipswich / Bodham

    Sounds like it is indeed a SSAS. With only 3 members, it would be possibly cheaper to wind up the scheme and transfer to 3 individual SIPPs instead. Fees would be met from the SIPP funds preferably (tax relievable).

    Give Suffolk Life a call - www.suffolklife.co.uk. They're experts at property acquisition and management within SIPPs for multiple owners.
     
  6. Gaidin109

    Mobster

    Joined: 12 Jul 2009

    Posts: 4,878

    I think whatvmy wife wants to know is can the company refuse to administer the fund without charging the fund fees, or does it have a legal obligation to continue to do so.
     
  7. achitophel

    Hitman

    Joined: 6 Sep 2006

    Posts: 730

    Is the scheme still open to further contributions from the 3 active members, is ti a defined benefit occupational scheme and does the company have an obligation to fund the scheme?

    The company is very unlikely to be obliged to actually provide the administration support services for the trust, but if:-

    1) the company does not do so, then the pension scheme may have to outsource the function and pay fees for the work, and

    2) If the company is required to meet any scheme shortfall (as for a DB scheme), then effectively any such fees paid will indirectly fall on the company anyway as they would have to make good the shortfall - it would then be in the company's interests to provide the admin services.

    Either way, I'd agree with The Abyss, pensions is not an area for dabbling - get professional advice.
     
  8. Gaidin109

    Mobster

    Joined: 12 Jul 2009

    Posts: 4,878

    Ok, some clarification. Its a retirement benefit scheme. the company only make conrtributions while the directors are employed ,althought the directors own two company buildings for which the rent the company pays is added to the pension fund and when they retire they can sell the property if they wish.

    The directors no longer control the company, so the new management do not want to continue to provide free administration for the fund, the directors say that the company is obligated to do so as the primary company, something my wife disputes.

    There cannot be any shortfall as it is not a defined benefit scheme.

    Hope this helps, the way I see it is that the company can charge the pension fund a fee for administration or the fund farms out the admin to a third party. Is this correct?
     
    Last edited: 23 Apr 2010
  9. achitophel

    Hitman

    Joined: 6 Sep 2006

    Posts: 730

    Assuming that the company is not in some way obliged to provide the scheme (which seems to be what you are saying - the company's only formal link to the scheme is to make contributions to it) and it is a defined contribution scheme rather than a defined benefit scheme, I'd cautiously agree with you. But it really is an area where they should get specialist legal advice, given the morass of regulation on pensions.