As Ssas is a form of occupational pension, they are regulated by The Pensions Regulator as opposed to the Financial Conduct Authority.
Unlike Sipp operators, Ssas providers do not have to contend with capital adequacy changes that take effect for Sipp providers in September.
The FCA has confirmed that Sipp operators will be required to increase their minimum capital holding from £5,000 to £20,000, with larger firms required to hold more based on a multiple of their assets under administration.
Additional requirements will apply to firms that offer non-standard investments.
This new minimum is intended to cover the cost of winding down an operator in the event of financial difficulty.
Martin Tilley, director of technical services at Dentons Pension Management, says the need for greater diligence over asset acceptance and increased capital adequacy costs for Sipp providers, particularly where non standard assets are concerned, has made some exit the market.
Mr Tilley says Sipp regulation has seen Sipp providers review their processes and charging structures.
Being that a Ssas is an individual trust, it has no such capital adequacy cost implications and while its trustees should still fully understand any investment made, Mr Tilley says it can often be a more viable self-invested vehicle now than a Sipp.
Ssas is subject to regulations regarding the provision of risk warnings on drawing benefits, signposting the Pensions Wise service and also the requirement for advice on taking transfers.
Since 1 September 2014, HM Revenue & Customs requires the formal scheme administrator to be ‘fit and proper’.
There is substantial HMRC guidance on the ‘fit and proper’ requirements for appointing a Ssas administrator.
Without specialist knowledge they will not fulfil the role of fit and proper administrators Martin TilleyHMRC stops short of insisting that the scheme administrator is a professional, but the main requirement is that you must have a working knowledge of pension legislation, or employ someone with that knowledge.
Dentons’ Mr Tilley says one change that is likely to continue into 2016 is the number of Ssas that, when the opportunity came to ditch their costly pensioneer trustee and actuaries, did so from 2006 and have self administered their funds since.
However, he says more and more Ssas operators are understanding that without specialist knowledge they will not fulfil the role of fit and proper administrators and the penalty for errors can be severe.
Thus he says these “orphan” cases are now seeking to reappoint specialist administrators for peace of mind.
Despite the ‘fit and proper’ requirement, John Keenan, senior manager of Xafinity, says there continues to be tens of thousands of ‘orphan’ Ssas that are a target for scammers undertaking pension transfers and scam investments.
He says: “The lack of control from a professional administrator and the support of a professional adviser can result in schemes losing their hard earned funds before they realise they have been scammed.”
Xafinity’s Mr Keenan says the predicted reduction in tax relief for high earners may attract some new contributions to Ssas.
At the start of this year, the Financial Times reported pension tax relief for those on higher incomes looks set to be ditched as part of HM Treasury’s overhaul of the pensions system.
According to the FT, chancellor George Osborne is expected to announce a move towards a ‘flat-rate’ government contribution in his March Budget.
Currently workers enjoy pension tax relief at the same rate as their income tax, but the change would see a shift towards a pension savings incentive of between 25 and 33 per cent for everyone, people close to the Treasury have said.
According to the FT article, the changes are unlikely to come into force for at least a year in order to give the industry time to prepare for the reform.
Depending on where the flat rate is set, the changes could save the Treasury billions of pounds a year.
