The much publicised and debated pension changes are sure to have an effect on many types of pension. But for the time being, any impact looks to be positive for the small self-administered scheme (SSAS) industry.
Even before the new landscape arrives, SSASs already come with flexibilities, in particular flexible drawdown options. But in recent years there has been a lot of change in the space, with many acquisitions reshaping the market.
A SSAS is set up as a form of occupational pension scheme, run by an employer for a select number of its directors. It differs from a Sipp because only company directors are able to set up a SSAS, and the schemes are limited to a maximum of 12 members – including the founder. The founder of the scheme also acts as the trustee, as opposed to Sipps, where the provider is the trustee.
All figures within this survey are as at 1 December 2014, unless specified otherwise. It covers 33 providers, with a few absences from last year and some newcomers. Both Bespoke Pension Management and Hornbuckle re-joined the survey after being absent in 2013, and new to the survey this year is Day Cooper Day. Meanwhile, Newell Palmer Trustees said it was no longer company policy to complete surveys and Channack Consultancy also declined to participate as it only “offers bespoke SSAS arrangements”.
Oval Trustees was bought by Talbot & Muir this year. Claire Trott, head of technical support at Talbot & Muir, says while there has been significant talk of consolidation in the Sipp market, she believes it has started – and is likely to continue – in the SSAS market too.
“The SSAS market is slightly different due to the fact that there is no need for a SSAS to be run by a pension provider. There are many advisers, accountants and companies themselves running one or a few SSASs and the impending and constant shifting of the pension legislation is likely to make many reconsider whether this is the right thing,” she says.
Making a profit
For those offering SSASs, but for which it is not core to their business, Ms Trott says now may be seen to be the time to sell their book to a larger dedicated provider.
“The changes are so significant that it may just be too onerous to continue to make a profit and provide the service SSAS clients require, which is truly bespoke but still needs to be efficient,” she adds.
Table 1 looks at the assets under management for all respondents. It also looks at the total number of SSASs this year and how many were set up in full for the past five years – data is for the year to 1 December for 2014’s figures.
Not every scheme provider disclosed all information – as with previous surveys – but an overview of those providers who did respond shows the total funds under management has increased by 27 per cent from £13.6bn to £17.3bn, and the average across each provider rose from £595m to £666m – an increase of 11 per cent.