A call by the chair of The Pensions Regulator (TPR) to ban the creation of new small self-administered schemes (SSAS) has been met with surprise and criticism from providers.
In a blog post on the TPR’s website, Andrew Warwick-Thompson suggested banning pension transfers to SSASs as well as proposing “serious consideration” of “an outright ban on the establishment of any more SSAS arrangements”.
The move is the most serious proposed as a means of cracking down on unregulated schemes, which have proved to be attractive to scammers in light of the pension freedoms introduced in 2015.
In response to Mr Thompson’s suggestion, Tom Selby, senior analyst at AJ Bell acknowledged the fact that some SSASs have and can be used for scams, but pointed out that those who want to use the product for that purpose “have been able to do so because the governance is too weak”.
Mr Selby continued: “We’ve always said the issue with SSASs isn’t the structure, but the governance that’s wrapped around that structure.
“Essentially, it’s just another type of pension product, which has some slightly different features that tend to be quite favourable, particularly for smaller employers.”
Claire Trott, head of pensions strategy at Technical Connection, told FTAdviser that SSASs gave more flexibility to small business owners in planning for retirement. SSASs have more scope than self-invested personal pensions (Sipps) to make use of commercial property holdings, for example.
Mr Thompson’s blog post highlighted that according to the DC Trust Report’s findings, “there may be in excess of 750,000 one-member SSASs”. Only schemes with two or more members are required to register with the TPR.
AJ Bell’s Mr Selby said: “It just seems odd to go from a place where there were clearly simple steps that you could put in [to reverse these issues]. Some of those I think we’ve laid out, with the idea of single-member schemes registering with TPR being one of them.”
The re-establishment of the pensioneer trustee role, eradicated in 2006 by pensions simplification, has been put forward as a means of tackling scams.
“I can’t see how introduce[ing] mandatory professional trustees wouldn’t have a significant impact on the levels of abuse that we’ve seen,” said Mr Selby, who also noted that access to loan-backs through SSASs can be a helpful means of providing finance for businesses.
kuba.shandbaptiste@ft.com
