Few areas of life remain un meddled with for long these days but the legislation behind the Pensions Industry has seen more changes than the Olympic Torch will have seen hands by the time it arrives in London. Each change, especially the more significant ones like the 95’ Pensions Act or (Lord help us) Simplification, tend to bring with them opportunity and peril in equal measure.
One of the biggest mistakes of Simplification was to allow SSASs to effectively dispense with the role of Pensioneer Trustee/Administrator, at least in terms of that role being performed by a recognised entity specifically established to have that responsibility and instead hand the reigns to, well, anyone or as pointed out by Richard Mattison recently in his letter to HMRC; no one.
I can understand the temptation to bin your old Administrator and go it alone as Scheme Administrator, I mean, how hard can it be? Especially when you consider that it’s no longer mandatory to appoint someone like us to be your Scheme Administrator, doesn’t that suggest that it’s always been money for old rope?
Sadly, what all SSAS Administrators knew then and those that opted to cut the umbilical cord have since learnt (the hard way), this path was fraught with danger and many SSAS Trustees must now feel like they’ve all but walked into a potentially expensive trap.
Richard Mattison’s letter to HMRC was focused on the fact that the prevailing legislation is open to abuse. This is certainly true but what I want to highlight is the more domestic issue of the far from simple pitfalls that await you if you try and fulfil the role of Scheme Administrator yourself.
The legislative burden placed on Scheme Administrators by HMRC is significant and so are the punitive measures that can be taken against you if you fail to perform your duties. Amongst other things, a Scheme Administrator will be expected to:
- provide Trust documentation to establish and govern the SSAS and where necessary amend it;
- register the SSAS with HMRC;
- provide SSAS administration services;
- maintain SSAS accounting records;
- provide technical support regarding all aspects of the SSAS, its investments and benefits;
- liaise with HMRC where necessary and file the scheme reports required by HMRC;
- make any payment due to HMRC from the trustee bank account;
- be liable for tax charges if /when things go wrong and regulations are breached or taxable events take place.
It’s worth remembering at this point that not only will few outside of the industry know where to even start with all of this, those that are in need of these services really ought to be busy doing other things such as running their own company or business. This is why most that have made this mistake come to realise the false economy of dispensing with an Independent Scheme Administrator. It will cost you more to do this on your own.
Let’s have a slightly closer look at cost though. We are certainly living through an era of unprecedented hardship and uncertainty and no one can be blamed for trying to save money where they can. The problem is that too much of what we need information on is, by its nature, complicated whilst too much of our information is provided in patronisingly bit sized chunks and overly simplistic measurements.
Look at health as an example; the traffic lights system on food packaging to deal with salt, fat and carbs. It’s too simple and potentially misleading.
Body Mass Index (BMI), there’s another one; ever been told your BMI is too high? Don’t get me wrong, it might be an indicator that there’s something to be addressed but viewed in isolation it’s meaningless at best. It has to be viewed alongside body fat percentage, age, lifestyle and plenty of other factors.
Cost is no different and just as misleading when viewed in isolation. It’s easy for a company that provides Pension Schemes to boast about their low fees, but how many are able to offer you a really great product for that fee and of equal importance, the level of service you’d like in looking after it and looking after you? Value for money is much more important than concepts such as cheep or expensive.
Think about it, ‘value’ chocolate, own brand blended whiskeys, books that come free with a bad magazine; when was the last time you ‘saved money’ and really wish you spent a bit more? Don’t let fees be the reason you ditch your Scheme Administrator and don’t let seemingly low fees be your sole guide in choosing who to trust with this responsibility. Make sure you are getting something that is worth the money you spend on it.
If you have taken on this burdensome role yourself and are encountering difficulties or just want to chat about the issue, pick up the phone to us; were here to help.
“PSG took the time to build a relationship with me, they understand what I need and they’ve got the technical expertise and customer service to consistently meet the high standards expected by our clients”
Gary Neill, Ashtree Financial Services
PSG SSAS (UK)
Lovingly crafted and still a sharp tool in anyone’s box, the SSAS is the product of choice for company directors and ours is the sharpest of the sharp.View product