For some schemes the total cost can be just a few hundred pounds, while through other providers it can be quite a few thousand. Remember, this is a charge on an illiquid asset so the cash to pay for it may have to be sourced from elsewhere.
Advisers should therefore be sure to understand not just the ‘standard fees’, but also the ‘extra charges’ that are not always obvious.
Interestingly, what may be considered best practice by the provider and/or professionals may not be in the best interest of the Ssas beneficiaries, especially when value for money and cash flow are assessed.
The Ssas for non-standard assets
Arguably, allowing non-standard assets is both one of the main strengths of a Ssas and one of its main weaknesses.
The ability to invest in non-standard assets can be a useful financial planning solution, especially for small family-led businesses. But, non-standard assets held in a Ssas is also a well-known vehicle used by pension fraudsters.
Despite a number of FOS and court rulings we have not seen a notable reduction in the number of Ssas schemes which facilitate investment in non-standard assets.
In fact, this isn’t entirely true.
Nearly all providers have introduced tougher due diligence procedures, however, many have also introduced higher charges for facilitating such assets. So while the ability to use non-standard assets exists, the provider may still decline to allow a specific investment.
In addition, where investment in a non-standard asset is allowed, the costs levied may not make it an unattractive solution.
When selecting a Ssas, researchers should evidence that they have considered any potential liabilities the provider already has due to holding non-standard assets and the implications this has had on their advice.
The Ssas for DB arrangements
This is a new style of Ssas that has certainly caught the interest of a number of providers and we therefore anticipate this option being adopted by more of them in the future.
Let me be clear, this solution is not about replacing a defined benefit scheme with a defined contribution one. It is about taking a small DB scheme that is struggling to find value for money and giving it more freedom to operate while ensuring it continues to meet its DB commitments.
These schemes can be set up with cash transfers and/or with in-specie transfers from the existing DB scheme. New DB arrangements can also be established.
In essence, these schemes combine the benefits of a Ssas with a defined level of scheme pension.
Costs need to be considered though, as each scheme requires an actuary. Their role is to calculate the contributions required to meet the defined benefits.
They are also responsible for complying with and reporting on HMRC allowances and limits for the schemes and individuals.