Small Self-Administered Schemes (SSAS), company sponsored pension plans, are facing their biggest threat since their launch nearly 50 years ago due to proposed changes by the Department for Work and Pensions (DWP). These changes involve increasing the General Levy, a fee paid by pension schemes, including SSAS.
Starting in 2026, these schemes may face an extra charge of £10,000, a significant jump from the current £44. Given that the average SSAS typically has 2-4 members, this adds up to £3,350 per member for a scheme with three members.
What does the General Levy fund?
The General Levy funds organisations like The Pension Regulator, The Pensions Ombudsman, and the Money and Pension Service. Despite the government pushing for pension scheme consolidation for better value, they’re heaping sizable costs on smaller schemes that might benefit less.
To address a funding deficit, the DWP proposes three options:
Option 1: Keep rates as they are, allowing the deficit to grow, potentially leading to higher costs for taxpayers in the future.
Option 2: Implement a 6.5% across-the-board rate increase for all schemes.
Option 3 (DWP’s preference): Suggests a 4% increase for all schemes, plus an extra £10,000 for small schemes from 2026. This aligns with a push for “fewer, larger, well-run schemes.”
Option 3 is concerning as it supports consolidating smaller schemes, arguing that they often have lower standards. However, a more balanced solution might be reinstating the need for a professional trustee, removed post-A-day.
Avoid the excessive charge
The proposed £10,000 premium, if approved, starts in April 2026. The DWP claims this gives small schemes time to transfer members and consolidate. Yet, for SSASs with property holdings, loan backs, and unique succession plans, this transition is complex, making it less straightforward to switch to other pension types.
To avoid the excessive charge and discuss your pension scheme options please contact the SMH Financial Services team on info@smh.group or 01142 664 432.
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