Why is it up to the industry to point out the elephant in the The Pensions Regulator’s HQ?
A short while ago, this article outlining a warning put out by TPR to avoid SSAS, appeared in FT Adviser and we responded in what we felt was the only appropriate way. And now this. I suspect we aren’t alone in wondering what’s going on at TPR at the moment.
Now it seems it’s not so much a referee warning people off playing football because sometimes, players behave poorly, as perhaps the IOC calling for an outright ban on the Olympic Games because some athletes knowingly cheat.
Once again it’s not an entirely accurate analogy, not least because the problem TPR faces is immeasurably simpler to fix but also who else is going to pay for those lovely international jollies the committee members enjoy, if they kill the Olympic movement?
Anyway, the concerns of TPR seem to be around the abuse of the current framework for SSASs. Well, all legitimate players in the industry share those concerns but, we suggest not unreasonably to look to the Regulator to take the lead in sorting this out. Instead of taking that lead, the Regulator seems to feel it’s appropriate to raise questions about its own existence by moaning about the state of something only they can improve. However if they cannot do so without a set of teeth more like those possessed by the FCA, then surely they need to present a case to the government for larger gnashers!
Might it actually come to pass that the ultimate result of Robert Maxwell taking a header off his yacht is a ban on one of the most innovative and valuable types of occupational scheme? One with a very long and proven pedigree around which an entire industry has grown, developed and become a very large employer that has only, relatively recently, been hijacked under the noses of the Regulator? That seems to be the preference of the very Regulator which owes its existence to that most famous of open water swims. To say this is a bafflingly bizarre stance for TPR to take is an understatement of unprecedented proportions.
Few would argue that the removal of the need for a Pensioneer Trustee was ill conceived and that the changes in legislation providing the client with the choice of acting as their own Scheme Administrator, has landed many clients in trouble with HMRC because they have not been able to ensure they obey all the rules. More worryingly, the pension liberators and fraudsters have seized on this as a mechanism to land the client with all the risk of tax charges flowing from breaking the pension tax law which is the consequence of their illegal activities. Whereas, a professional Scheme Administrator carries the responsibility and risk in return for delivering a valuable service which ultimately protects the client on all fronts.
And for those who routinely do the rounds in the forums accusing the professional SSAS providers of crowing about the need to reinstate the Pensioneer Trustee because it is a means of said professionals lining their pockets with fees, come and chat to a few of our clients who have been rescued from making costly mistakes because their schemes were not being run with the benefit of the professional service. In the days of a Pensioneer Trustee, there were expensive 55% tax charges for a client to fall foul of. Perhaps the value of the Pensioneer Trustee is more relevant than ever, just on the pension tax law compliance argument alone, but we digress. As relevant as this all is, it is pension liberation fraud and those that unscrupulously take advantage of vulnerable clients and a system vulnerable to exploitation that the reinstatement of the Pensioneer Trustee might now address.
Vilifying SSASs and in the process, tarring all SSAS providers with the same brush, is an epic piece of over-reaction from a Regulator who ought to be working with the industry to champion the many virtues offered by SSASs and render it all but impossible to allow any form of rogue practice.
As some of you know, here at PSG we have a lovely office dog, Meg. Now it seems to us that this whole issue of dodgy SSASs is so simple to resolve that we asked Meg what she’d do. She outlined three simple steps that’d make it all go away.
Step 1: make it a requirement to register all SSASs, irrespective of how many members it has, with TPR (is this not the elephant in the room?). 800,000 SSASs and 750,000 of them unregulated you say? Well how on earth do you resolve that? What’s that Meg? Make registration a statutory requirement? Wow, you’re a genius!
Step 2: define the minimum due diligence SSAS Providers need to carry out to establish Sponsoring Employer bona fides. We at TPSG amended our SSAS Application long ago to collect this due diligence and so have it to make available to HMRC as soon as they request to see it as part of their SSAS tax registration process.
Step 3: (if still necessary after steps 1 and 2 are in place) re-instate the need for SSASs to have an Independent Trustee (whether it is called a Pensioneer Trustee or not does not matter) and make that retrospective to flush out those that currently don’t.
Furthermore, given the hoops that SSAS providers must already jump through when registering a new SSAS with HMRC and how a mere oversight or error could be enough to result in a scheme registration rejection, we find it very hard to believe that many schemes are now being set up using dormant, or in some other way, non-bona fide employers. In fact we cannot believe that the problems being highlighted relate to any scheme established in the last eighteen months (at least).
Opinions abound on what it’s going to be like running a business during and, most crucially, after our divorce from Europe. However, we think it’s fair to say that few, if any, are suggesting that things are going to get better and most agree that small business will be key to making Brexit work. This is a really important point; within the legislative pension framework long provided by successive governments, SSASs have been providing immeasurable assistance to business owners as well as solid retirement funds, for decades, contributing in no small part to the innovation, entrepreneurship and economic activity. It is hardly the stuff of fantasy to suggest that SSASs might be more vital over the next ten years than they’ve ever been. So to whip up a debate about whether or not to ban them at this very point in time just adds to the sense that this current thinking was born on a Friday afternoon after a lengthy, maybe slightly boozy pub lunch.
Finally, we can’t not comment on the often repeated suggestion that SSASs ought to be regulated ‘like SIPPs’, or even worse, actually by the FCA. A SSAS is not a retail investment product for the consumer, it is an occupation scheme established by a sponsoring employer. If ordinary retail clients have been admitted to a SSAS it is a failure of the Regulator and HMRC and the Government, not the fault of the SSAS itself or all of those bona fide employers who have set them up and worked with professionals to administer them compliantly. No thanks. SSASs are one of the few remaining long term savings vehicles that serve the needs of intelligent grown-ups who will not benefit from watering it down to resemble it’s hollow younger sibling, the SIPP.
PSG SSAS (UK)
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