Personal Pension  

Ssas SOS

This month I will be discussing the Pensions Ombudsman determination in the case of the Royal London Personal Pension (PO-7126). This determination is another of the so-called ‘pension liberation’ cases which continue to be of concern to the Pensions Ombudsman, The Pensions Regulator and Revenue & Customs.

The ombudsman did not uphold a complaint brought by Donna-Marie Hughes against The Royal London Scheme for failing to transfer her benefits – she was 41 when she applied for the transfer – to an arrangement called Babbacombe Road 1973 Limited SSAS. The ombudsman held that Royal London made the right decision in refusing the transfer, but stated that they could have “communicated more effectively” with Ms Hughes.

The SSAS was registered by Bespoke Pension Services Limited with HMRC as a registered pension scheme on 3 July 2014. The Principal Employer of the Scheme is a UK-based company, incorporated on 4 June 2014, with the registered address of Ms Hughes’ home address and with Ms Hughes listed by Companies House as the only employee, although she was not receiving a salary. On 23 July 2014, the transfer application and paperwork were submitted by Bespoke on Ms Hughes’ behalf to Royal London.

On 8 September 2014, Royal London wrote to Ms Hughes to inform her that they were not prepared to transfer her benefits because they had been “unable to satisfy themselves that a payment to the scheme would be used for the purposes of providing appropriate pension benefits under a registered pension scheme.” They did state, however, that they would consider a request to transfer her benefits to another scheme. On 14 September 2014, Ms Hughes challenged this decision and sought to allay the concerns of Royal London by stating that the request was a legitimate transfer request in favour of a genuine occupational pension scheme.

Royal London then carried out a review of determinations by the Pensions Ombudsman where a transfer of benefits had been refused. Their findings reaffirmed their decision in relation to Ms Hughes’ request. As a result, Ms Hughes’ case was brought to the ombudsman by Bespoke, which argued that the decision to refuse a transfer was unjust and had prevented significant investment growth on her pension benefits.

Royal London did not consider that Ms Hughes had a statutory right to transfer her benefits and had a number of concerns including: the status of the receiving scheme, the recent formation of the principal employer, the recent registration of the SSAS with HMRC and the extent of the advice received by Ms Hughes. Of particular concern was the belief that Ms Hughes was initially contacted through cold-calling. Royal London concluded that while the SSAS may not have been set up to facilitate pension liberation it could not correctly be categorised as an occupational pension scheme, so Ms Hughes did not have a statutory right to transfer to it.

In reaching a decision, the ombudsman first considered the scheme rules and concluded that they did not give Ms Hughes an absolute right to a transfer. In assessing the statutory right to a transfer value the ombudsman held that SSAS did pass the “purpose test” – namely, that the scheme should be “for the purposes of providing benefits to, or in respect of, people with service in employments of a description”, and the “founder test” – namely, that the principal employer was an employer of people with service in employments of a description, and therefore reached the conclusion that the SSAS appeared to be an occupational pension scheme.