SSAS collateral damage in small pensions’ Dunkirk

To date, the DWP’s proposals to change the general levy to “tax” small occupational schemes £10,000 for being small, hasn’t aroused much opposition. The big lobbyists, the PLSA and ABI have long given up on small occupational schemes and focussed on their core membership, (the large occupational scheme and the insurers – respectively).

It has been left to Jade Murray and a handful of financial journalists to see the existential threat that the DWP’s proposals are to the small self-administered pensions, the insured executive pension plans and the relatively small number of DC and DB workplace pensions with less than 10,000 members.

I say “relatively small” as the vast bulk of the 28,000 DB schemes and 5,000 DB schemes that are “regulated” by TPR involve only a handful of members.

I have argued that DWP is right to be ruthless but it is beholden on TPR to give guidance to those who manage SSAS, as to how to avoid penal levies that are planned to  arrive from 2026.

Collateral damage

If the DWP had been targeting SSAS, they would have set the membership limit at 100 or even 10 so that an occupational pension was considered the collective endeavour of SMEs including all their staff over time.

But the DWP have set the bar at 10,000 members. In terms of assets, a scheme with 10,000 members can have hundreds of millions of pounds . This is the target market for the nuclear levy. It is set at a level, which arriving on top of all other expenses, tips the running of a medium sized DB or DC scheme into the “unsustainable” camp.

This is part of the Mansion House agenda, if VFM assessment doesn’t get you, the general levy will.

The time limited exemption for the medium and small occupational scheme is no more than three years. While SSAS is collateral damage, the damage will be elsewhere.

This is evident in the modelling by the DWP on the impact of the proposed levy. It only takes 10,100 of the 32,000 target schemes to pay a £10,000 levey to meet the additional fee of £101m – under option 3.

So what of the 22,000 schemes unaccounted for?

It sounds brutal, but the DWP presumably expects them to have wound up by the time the general levy for 2026/7 comes due.

This represents a demolition job that pensions has never previously undertaken. Just where the human resource to take out so many schemes is coming from, is unclear. All the pension lawyers, employee benefit consultants, actuaries and financial advisers involved in the SSAS industry would need some kind of fast-track wind up and transfer protocols to get close to the numbers of wind-ups implicit in the DWP’s numbers.

Estimates for wind-ups discussed at yesterday’s DB endgame conference  (thanks SG) suggested that the timeframe for this would be 30-40 years, more than ten times the implicit assumption from Government.

I can only assume that those schemes sat in the queue in 2028 – will be given an exemption. Because levying fixed cost levies on 30,000 sitting duck schemes awaiting evacuation would create pension’s Dunkirk.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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