Personal Pension  

Going forward, looking back

In the early years, there was little or no control over the way in which such schemes were managed; some schemes’ investments included yachts, vintage cars, or other expensive assets specifically designed for the use of the schemes’members. Unsurprisingly, this quickly came to the attention of the Inland Revenue who set about creating a more structured framework for the establishment and management of such schemes.

While regulation was brought in to prevent members receiving some kind of beneficial enjoyment from the investments of their scheme before retirement, there was also the introduction of the Pensioneer Trustee. The investment restrictions and formal appointment of the Pensioneer Trustee were incorporated in the infamous Joint Office Memorandum Number 58 issued in February 1979, setting out the structure for a Ssas from then on.

This also defined a Ssas as an occupational scheme with no more than 12 members. Memorandum Number 58 stresses that the Pensioneer Trustee is a person or body well known to the Inland Revenue whose principal responsibility is to ensure that the scheme is not wound up improperly; in other words with monies being transferred to the members.

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Specifically, it stated that the Pensioneer Trustee is not a “watchdog” for the Inland Revenue in any area other than the improper termination of the scheme. In reality all those who have been involved with them since the late 1970s have felt that their responsibility to the Inland Revenue was significantly greater than that in relation to monitoring the wind-up of the scheme.

Changes in legislation, such as the requirements for the Pensioneer Trustee to be a joint owner of all assets of the pension scheme and to be a joint signatory on a scheme’s bank account effectively proved that the Inland Revenue was assuming that the Pensioneer Trustee would ensure that the pension scheme and its members abided by the legislation during the normal development of the scheme, not just at termination.

It is also true to say that, through the Association of Pensioneer Trustees, professional Pensioneer Trustees developed a strong working relationship with the Inland Revenue over the way in which a Ssas is both administered and reported. A clear two-way conversation and understanding was in place. This benefited not only the Inland Revenue but also those practitioners who were active in the management of such schemes. The ability of the Inland Revenue to exercise discretion under the terms of the existing legislation was a vital and positive contribution to the way in which such arrangements were managed.

While the introduction of the new legislation took some years to come to fruition, it was clear early on that there would be certain clients who would take advantage of the absence of the Pensioneer Trustee, particularly those who objected to paying fees for what they saw as an intrusion into the way they wished to manage their pension arrangements. The proportion of Ssases that removed their Pensioneer Trustee immediately after A-Day (6 April 2006) is thought to be as high as 10 per cent and it is almost certain that a significant proportion of these schemes have gone “off the radar” and are operating in a manner which would not have been acceptable to the Revenue prior to A-Day.