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The Government pension consultation on pension fraud ended in February, however the comments that followed from Andrew Warwick Thompson, executive director of the Pensions Regulator caused an outcry in the Small Self-Administered Scheme (SSAS) market.
He set out three measures to try and combat the use of SSAS in scams:
Cold Calling – As per the pre-budget speech, the first measure was to end to cold calling, however the regulator wants to take it further by banning unsolicited texts and emails. This is something we would support since no reputable SSAS company would try and market its services this way.
Set up a Safe Scheme List – This has derived from the desire to ensure transfers are going to pension funds with a “genuine employment link”. It is to stop the practice of SSAS being set up via off-the-shelf companies to avoid the regulations of Self Invested Personal Pension (SIPP) and then being used in pensions scamming. The regulator has however suggested that a safe list be set up to limit the due diligence that needs to be done on transfers. This would include Master Trusts or Financial Conduct Authority (FCA) regulated vehicles such as SIPP. Clearly SSAS’ are excluded from this list.
Ban SSAS Transfers – He then went on to state that transfers to SSAS and new SSAS should be banned. Clearly this is not a proposal we would support and feel it is a heavy handed way of dealing with the problem.
The industry has fought back stating that the scammers will find another route to scam. SSAS members who are likely to be harshly affected are those who use their SSAS in a legitimate way, to support their business which are typically family owned.
Many of the investment vehicles used for scamming have complex structures, this would also apply to a SIPP investment, which the above would not address.
The Pensions Regulator has 21,000 SSAS schemes registered but as one member schemes do not need to be, it is estimated by the government that there could be as many as 750,000 one member schemes not registered.
The industry is in favour of increased regulation. We would propose a reversion to each scheme needing a professional trustee or independent trustee that takes on the responsibility of operating within the rules. The exemption of not registering one member schemes should be removed and firms operating within this market should be regulated. Many of the bona fide providers already are since they operate in both the SIPP & SSAS world.
It is expected that there will be much further debate on this topic and much more by way of reaction from the industry.
If you have concerns regarding your pension, we would suggest that you speak with your usual financial adviser or alternatively, speak to Kerry Houghton for more information on 01772 550614 or via email Kerry.firstname.lastname@example.org