One evolving theme we can see is the focusing of propositions to meet specific needs. We can summarise these as being:
- The Ssas all rounder.
- The Ssas for commercial property.
- The Ssas for non-standard assets.
- The Ssas for DB arrangements.
The Ssas all rounder
This is the most common type of scheme - it is the Ssas mass market product.
These schemes broadly provide access to the whole of market when it comes to investment options. However, a number of Financial Ombudsman Service and court rulings have made providers re-examine their due diligence procedures and they are universally more stringent than they were just a few years ago.
The result is that the label may be ‘whole of market’ but the reality is none truly offer this anymore.
While these schemes tend to meet the needs of most, they are primarily designed to facilitate standard assets and be run as an alternative to a Sipp.
Advisers should consider whether the extra flexibility is actually needed, including whether a Sipp is more appropriate.
Referring back to Mr Warwick-Thompson from TPR, in the same blog he stated: “Sipps, which are the subject of far tougher regulation by the FCA, (they) are a safer vehicle for consumers who want control over the investment of their pension pot”.
Presuming a Ssas is the most appropriate solution and access is desired to any of the following, then a more focused Ssas may be more appropriate.
These are designed to meet very specific investment needs and can be the cheaper option, they include:
- Commercial property.
- Non-standard assets.
- DB arrangements.
The Ssas for commercial property
With 96 per cent of schemes able to facilitate direct investment in commercial property there is no shortage of options.
However, when advisers look at the costs involved and the restrictions some providers have in place, it becomes clear that some are more accepting of commercial property on their books than others.
In addition to their standard product costs, most providers charge initial and ongoing costs for commercial property. However, many schemes also require certain types of professionals to be involved including accountants, solicitors and surveyors, and these can represent a significant additional cost that may not be clear at inception.
With at least triennial valuations required, the cost of these ‘extra charges’ and ‘professionals’ can make a considerable cost difference.
For example, many Ssas schemes insist that property valuations are undertaken by a member of the Royal Institution of Chartered Surveyors (Rics).
However, Rics members tend to charge multiples of that charged by local estate agents – who arguably have a better understanding of the local market.
Add together the multiple valuations the Ssas provider requires with the administration costs and the simple task of undertaking a periodic valuation can become a financial burden on the Ssas.