Advisers are increasingly urging their small, self-administered scheme clients to switch trustees to save on charges and improve service, specialists have claimed.
Intermediaries say more businesses and individuals have turned their attention to their pensions to check whether they are being overcharged for the service being provided, especially in light of the current economic climate.
This in turn has caused Ssas providers to experience a significant uptick in the amount of pension switches being pushed through.
A Ssas pension switch, otherwise known as a takeover, involves the transfer of a Ssas pension from one provider to another and the re-registration of investments to include the new professional trustee, which is often the provider itself.
A lack of flexibility from legacy providers is one reason why some are turning to newer propositions, according to Stuart Gibbs, chartered financial planner at Prydis.
Covid-19 has also had a role to play as individuals have had more time over the past few months to look at their finances more closely.
Alwyn Evans, chartered financial planner at Churchgates Accountants and Financial Planners, agreed this has been detrimental to older providers that have old style pricing and tend to lag behind when it comes to technical developments.
He said: “Technology and efficiency play a big part when it comes to winning clients,” he said. “Newer providers out there trying to win business do so by having a competitive charging structure.”
According to Mr Evans, some legacy providers charge as much as £4,000 in fees each year to run a simple pension, something which another provider could do for half the price.
He said: “It is difficult for providers to justify charging this amount of money when dealing with a simple Ssas that does not hold a lot of assets. Fees this high are only justifiable where the trustees are sorting issues or looking after complicated schemes with a variety of assets.”
Julian Puddy, director at advice company Opus Business Pensions, told FTAdviser: “Some clients have been with their Ssas provider for a long time and are now noticing that they are paying high charges for an average service. We help them scrutinise the trusteeship and look at the more competitive prices on offer where a similar service is being offered.
“What often happens is that fees are charged directly to the pension pot so the client is unaware of what they are being charged. It is all done under the radar.”
Ssas providers see takeover boost
Ssas provider Obsidian told FTAdviser it experienced a 20 per cent increase in Ssas switches in June.
Nathan Bridgeman, director at Obsidian, said: “June was a record month in our history for both new scheme establishments and Ssas takeovers.
“Owners of small and medium-sized enterprises are voting with their feet and reducing costs for their business and improving service on the back of Covid-19.”