From Special Report: Sipp and Ssas - September 2011
In the shadows
With big marketing budgets behind SIPPs it is inevitable that they overshadow SSASs. But is there still a place in the market for the more niche scheme?
Dentons, Ebor Trustees, Legal & General, AJ Bell, TJ Green and Accomb Trustees all appear to target or attract the high end of the market, having average SIPP values of more than £1m.
Servicing the SSAS
New business figures aside, those that want to open a SSAS need to research which providers offer the particular features that they need, at the price they want to pay. Charges show how much providers differ in their proposition, with fees for each service varying greatly.
As with SIPP schemes, it is difficult to compare like with like, as there are so many different charging structures, with some levying a flat fee for a service, while others charge a percentage or additional costs for using an alternative solicitor or for borrowing on a property purchase, for example.
For the initial fee, five providers charge nothing, presumably to attract more new business. Both Friends Life and Scottish Widows charge nothing for the initial fee, buying a property or loanbacks, instead levying an annual fee that includes all of these elements.
At the other end of the spectrum is Mattioli Woods, which charges £2,000 initially, £510 each year, plus work done on a time/cost basis. However, the first year of property buying is free. Regardless, this seems an expensive proposition. Barnett Waddingham, which has a high average SSAS value, has an average pricing scheme, so does not target this market in order to elicit more in charges. An individual wanting to set up a scheme, buy a property, organise a loanback and then pay the annual fee would be set back a minimum of £3,800.
Compare this to Hornbuckle Mitchell, which comes in at £3,450 for the same transactions and it is clear that the cost is not increased for targeting high net worth individuals.
The likes of Hanover and Ebor Trustees, which charge the annual fee on a percentage basis, would prosper with high net worth individuals, with their remuneration being directly related to the size of the SSAS scheme, while providers such as IPM Trustees and KKW Pensions, which simply state that they charge on a time/cost basis would need further investigation. This is particularly the case if no maximum or average rate was detailed.
The fees levied for loanbacks also vary greatly, with some providers stating a single upfront fee, while others break it down into a per annum charge or a fee per loan. A large number of SSAS members could benefit from the loanback facility and it is this element of the pension that many predicted would lead to a boom in new business, likely not to the extent of SIPPs but enough to propel them into a more mainstream market.