In his latest column for SIPPs Professional, SSAS expert Martin Tilley looks at SSAS misundertanding (for professional advisers only).
Sometimes it is hard to believe that I have been working in the self administered pension sector for over 30 years.
Much has changed over those years and SSASs some years ago fell out of favour as SIPPs gained in popularity.
But there has been a shift back to SSAS in recent years, in part driven by the lack of bank lending to SMEs. Despite this, they still remain a bit of a mystery to some advisers, and this isn’t a criticism, it is often just based on the type of client bank and location they are in.
I do however have to admit to getting a little frustrated when we keep being asked by advice firms to join a ‘panel’ of SSAS providers and undertake the due diligence that would go alongside this.
Now you may think my frustration is misplaced and that being on a panel is a great thing as it makes it easier for the adviser to recommend us. But in truth, I fear this shows a lack of understanding of what a SSAS really is.
If we go back to basics, a SSAS is a trust, it is an individual entity which is an occupational pension scheme and is effectively controlled by the scheme’s trustees, one of whom is often a professional trustee. Similarly, there is a scheme administrator and routine administrative functions may also be carried out by the same professional services company as part of a SSAS practitioner’s group.
However, these companies do not provide the product, they are simply providing services to the member trustees and are capable of being appointed and removed at the discretion of those member trustees.
I really believe that all SSAS administrators should help to educate and inform more advisers on the benefits of a SSAS and also how different they are from a SIPP. This will help to stop misunderstandings and situations that I have heard of and also seen first hand during my career.
I will give you an example, I was made aware a few years ago of an adviser looking after a number of directors at a small firm. When asked to provide advice on transferring some pensions to an existing SSAS that the business had, he felt unable to formally advise the client as the SSAS administrator was not on their firm’s panel of SSAS providers.
The proposed actions from the adviser were quite frankly horrifying. They recommended to their client that they establish a brand new SSAS with a provider that was on their panel and transfer all of the current scheme’s existing assets to the new SSAS along with the original external transfers that he had been asked to advise on.
This proposed action and recommendations signifies a complete misunderstanding of the concept of a SSAS and the services that an administrator provides to the occupational pension scheme. A bigger concern for me is that it signals that the advice firm doesn’t have sufficient expertise to vet providers of services to a SSAS and if this is the case, do they have the requisite skills to be advising on a SSAS at all.
Another area of misunderstanding of a SSAS is that the SSAS administrator providing the services to the pension scheme will often not be authorised and regulated by the Financial Conduct Authority, a safeguard which some advisers and their PI providers, find reassuring but it doesn’t always provide the protection that many think it does.
In any event, should the SSAS administrator providing the services be in some way deficient in the eyes of the adviser and SSAS trustees, it is possible to replace them. That is the joy of them being the provider of services rather than the product provider, there is no transfer to be done, they are simply replaced on the scheme by another provider of services.
While this may still be an expensive suggestion and requires the reregistration of assets to include the incoming practitioner’s details and address, it does not mean that the company has to create a brand new scheme, and there are no time delays in getting the scheme registered with HMRC or the cost of transferring the existing assets.
Martin Tilley is chief operations officer at WBR Group