Self-invested pension provider Barnett Waddingham is signposting pension scheme member-trustees to Pension Wise and regulated advice, effectively introducing a ‘second line of defence’ despite this not being required by the Pensions Regulator.
Speaking to FTAdviser, Barnett Waddingham’s self-invested technical specialist James Jones-Tinsley said that if all members of a small self-administered pensions are trustees, TPR has ruled providers do not have to deliver the ‘second line of defence’ risk warning in any circumstances.
This differs to the Financial Conduct Authority’s position, which has taken a more stringent stance on schemes it regulates and requires that providers offer risk warnings in any instance unless a request for pension access comes direct through an adviser.
The FCA only regulates contract-based schemes, with Ssas and other trust-based schemes coming under the TPR. There have been complaints that the two are not in accord on their approach, with previous pensions minister Steve Webb saying a single regulator may eventually be introduced.
A spokesperson for TPR said: “The trustees or managers of an occupational scheme do not need to provide the new information in relation to pension flexibilities under the disclosure regulations to a member where all the members of that scheme are trustees or managers of the scheme.
“There is also a separate exemption for single member schemes. Therefore, if all the members of the scheme are trustees, or if the Ssas is a single member scheme, then the new disclosure requirements will not apply to them.”
TPR’s general stance for the ‘second line of defence’ is also not as prescriptive as that of the FCA and simply asks firms to signpost clients to Pension Wise or a regulated adviser, adding that trustees need to highlight the generic risks to be considered when accessing their pension.
The spokesperson added that its guidance is specifically tailored to the duties and legal circumstances of pension scheme trustees and is designed to be easily and quickly adopted by pension schemes.
Mr Jones-Tinsley said that “in keeping with the spirit of the regulation”, Barnett Waddingham is applying the TPR’s ‘second line of defence’ warnings to all its Ssas members, including those where all members are trustees.
However, the group has stopped short of the warnings it gives to Sipp members, which is a questionnaire with around 15 questions giving personalised risk warnings depending on the answers received.
Mr Jones Tinsley said: “We don’t give questionnaires to Ssas... we do talk to them about Pension Wise and seeking advice and then after that we let them come back to us to give them the means to achieve.
“I am not aware of what other providers are doing, but I don’t think it does any harm to conduct the ‘second line of defence’ warnings. Money has been spent on Pension Wise and we have lots of professional connections with advisers for full in-depth chats.
“That’s just sensible and it would be nice for other providers to do the same.”