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.
The DB Ssas allows the pension income to be paid as a scheme pension or for an open market annuity to be purchased.
In addition, transfers from DB to DC to access the pension freedoms may also be allowed, subject to the usual checks, balances and agreements.
Land of opportunity
The Ssas market is still the open land of opportunity, but it is no longer the 'Wild West'.
Tougher HMRC and TPR standards combined with providers carrying out more stringent due diligence on assets, is pushing the fraudsters out.
From an adviser's perspective Ssas represent an opportunity and can be used with greater confidence than before. That said, issues to consider include:
- Matching the Ssas to the client’s needs has become harder. This is because providers want to be seen to be 'open market' but most have understandably introduced due diligence procedures and charges designed to control their risks and exposure to certain asset types and this has resulted in 'restricted open market' offerings.
- Advisers (paraplanners) should evidence that the features and benefits match the stated needs but also that the total Ssas solution and relevant charges represent ‘value for money’. Doing this will help evidence that an appropriate style of Ssas has been selected.
One last point, advisers should check that their Professional Indemnity (PI) insurer covers them for recommending Ssas, especially where non-standard assets are being used.
Richard Hulbert is an insight consultant at Defaqto
