Britain’s exit from the European Union could make it easier to introduce more thorough regulation of small self-administered schemes (Ssas) in order to prevent future pension scams, according to Dentons.
Since pension simplification on A Day in 2006 there has been no requirement for a Ssas to have an independent pensioneer trustee to manage its administration.
While some have continued to elect a scheme administrator, others have chosen to save costs and administer the scheme themselves.
This has led to some Ssas members becoming victims of pension scams to the point that The Pensions Regulator (TPR) called for the products to be banned altogether.
But Martin Tilley, director of technical services at Dentons, said that it could become easier for the UK to introduce better regulation of Ssas once the UK has left the European Union.
Prior to A Day Ssas were required to have a pensioneer trustee, an independent HMRC approved personal organisation, which would oversee the operation of the Ssas and make it difficult for any scheme to be operated outside of the rules and regulations at that time.
Mr Tilley said the reason given by the government for doing away with the requirement for a pensioneer trustee was to enable cross-border pension schemes within the European Union to be set up with standard rules, so that one set of rules applied to all pensions.
It was not possible thereafter to require a particular type of trustee in the UK for a certain type of scheme.
“If we do come out of the European Union then maybe that will fall away so that we can put in some legislation to govern pensions properly.”
Mr Tilley said that having a compulsory trustee did not fit with European legislation, and that Europe did not recognise the concept of a trust.
A pensions lawyer, who was consulted on the A Day rules and requested to remain anonymous, said HM Treasury had originally suggested that it was EU legislation that prevented the UK from continuing with a pensioneer trustee system in 2006.
The lawyer agreed it could be easier to reintroduce a system of pensioneer trustees after Britain leaves the European Union.
Robert Graves, head of pensions technical services at Rowanmoor, said if HM Treasury was motivated to do away with the requirement for pensioneer trustees based on inconsistency with EU legislation then the UK might be free post-Brexit to introduce new rules.
“If the terms of the Brexit mean that we no longer have to abide by that particular rule, then it would allow us to impose very specific rules again relating to the operation of Ssas and potentially pave the way for some form of reintroduction of the professional independent trustee requirement.”
Before the changes in 2006 HMRC looked after a list of approved Ssas pensioneer trustees, but Mr Graves was doubtful that it would revert back to such a structure.
He said that HMRC might still have an aversion towards having the discretionary approval of whether a firm or individual has the necessary experience or expertise to be a pensioneer trustee, and instead could introduce a definitive systems of tests to allow someone to qualify as a trustee.