Changes to pensions legislation in 2006 were meant to make things simpler. For small self-administered schemes (SSASs), it meant many were left without a professional trustee – in other words, no one with detailed, professional knowledge of pensions on the board.
This has led to mistakes being made and charges becoming payable. Get your clients in order with MM’s guide to managing SSAS orphans.
1. Check your client book for SSAS orphans. Some SSAS clients will have a professional trustee, some will not. If they do, it may or may not be directly linked to the SSAS provider. If your client doesn’t know whether they have one or not, it’s time to start digging.
2. Look beneath the bonnet for any issues. It is perfectly feasible that your SSAS clients don’t have a professional administrator but are getting along perfectly well – there is no problem with this if they understand the rules and are staying within them. But it may be wise to not take assurances at face value; it’s easy to be unaware of a misdemeanor if you don’t understand how or why it occurred.
3. Beware of warning signs. Errors often occur when trustees have missed a change in pensions legislation – the change in drawdown limits, for example – so use these occasions to double-check all is well with your SSAS clients.
4. Consider a joint approach with a professional administrator. In the past, advisers may have been wary of working with a professional administrator on their client’s SSAS for fear of them being poached. But in the RDR environment, it is easier to segment fees for advice, services and execution – just make sure you have a proper agreement in place.
5. Prepare your clients for the bad news. If a mistake has been made within a SSAS, it should be corrected. Yet even if no material benefit has been gained once corrected, if a chargeable event has occurred, it must be paid for. There is little to do but accept the situation and ensure it doesn’t happen again.
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