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Pension regulator calls for SSAS transfer ban: what it means for members

Written by: Paloma Kubiak
The Pensions Regulator has called for a Small Self-Administered Scheme (SSAS) transfer ban in its ongoing bid to tackle scams. Here’s what it could mean for existing members and why there’s been a negative reaction to the call.

As part of The Pensions Regulator’s (TPR) move to help stop scams, it has called for a SSAS transfer ban.

The occupational pension SSAS – a fore-runner of the better known Self-Invested Personal Pensions (SIPPs) – are smaller cost-effective pensions set up by an employer for up to 11 employees and it can include family members. They enable the trustees to have control over the investment selection for retirement savings, usually within funds, stocks, shares and commercial property.

One of the key benefits of a SSAS over a SIPP is that the scheme can lend up to 50% of its value back to the business to help it grow. See’s Back to Basics: what is a SSAS? for further details.

TPR estimates there are about 21,000 SSASs in the UK. But only schemes with two or more members need to register with the regulator, (though it doesn’t actively regulate them), while the government suggests there may be in excess of 750,000 one-member SSASs.

‘SSAS: vehicle of choice for pension scammers’

SSASs have tended to be a “vehicle of choice for pension scammers” owing to their lack of regulation as they are “exempt from many of the legal duties designed to protect members that are applicable to larger schemes,” according to TPR.

Very small schemes can be open to abuse because the only person party to all the decisions is the person potentially being scammed. These scams work by convincing people to set up a SSAS in order to allow a member to “access investments they couldn’t get otherwise” or to “take a personal loan from their pension”.

They often include charging extortionate fees – as high as 20%, and often not disclosed initially – and unregulated investments such as overseas property or natural resources. They can also lead to tax charges of up to 55% on the individual concerned.

Andrew Warwick-Thompson, executive director for regulatory policy at TPR, said: “The ease with which a SSAS can be established, and the minimal legal and reporting requirements for such schemes, has made them the vehicle of choice for criminals setting up a scam.

“In my view, SSAS have gone far beyond the scope of the policy intent that created them. SIPPs, which are the subject of far tougher regulation by the Financial Conduct Authority, are a safer vehicle for consumers who want control over the investment of their pension pot.

“I believe that pension transfers to SSAS arrangements ought to be banned. In fact, to put a stop to their abuse, I believe that an outright ban on the establishment of any more SSAS arrangements also warrants serious consideration.”

What this could mean for SSAS members

As well as TPR calling for a SSAS transfer ban, a joint-consultation by the Treasury and Department for Work and Pensions (DWP) which closed this week suggested more rules should be implemented for the scheme. It builds on the crack down on the abuse of SSASs announced in the Autumn Statement where the government called for providers to be given greater power to stop suspicious transfers.

Martin Tilley, director of technical services at Dentons Pensions, a provider of SSASs, said a move to ban the schemes could lead to greater costs for existing members who will be forced to move to SIPPs instead.

He said: “The legislators and regulators have let people down. SSASs aren’t as regulated as SIPPS and there is nothing to stop them being used for scams but many schemes are legitimately set up and used for pension savings.

“Rather than ban transfers, the regulator TPR – which doesn’t actually regulate the schemes – should make it compulsory for these smaller schemes to have a separate and impartial body to oversee them to ensure money is not lost to inappropriate investments.

“SSAS members could be forced to move to SIPPs which are more expensive products. As an example, if there are four members of a SSAS, they would need to be split up and put into four SIPPS so the cost would double as four schemes are being run rather than one. With one scheme via a SSAS, there’s only one cost shared between the members but in a SIPP, each member has to pay for the scheme.

“This call will scare people off SSASs and it’s not in the interests of people who already have them.”

Tilley added that for now the industry needs to wait for the DWP to assess responses to its consultation and said: “In the meantime, SSAS is a legitimate and efficient pension planning vehicle but care should be taken by anyone approached to establish one of these to invest into unregulated and unusual investments.”

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