Rowanmoor: Scheme pension reclassification penalises SSASs
Rowanmoor Pensions has been forced to link new SSAS scheme pensions to the limited price index after the Government reclassified the arrangements as defined-benefits.
In October, Money Marketing revealed an amendment to the Pensions Bill could kill off the market for scheme pension after the DWP excluded the payments from its definition of a money-purchase scheme.
However, Sipp and SSAS industry trade body the Association of Member-directed Pension Schemes argued DB funding regulations mean SSASs with fewer than 12 members will be exempted.
Last month, Standard Life head of pensions policy John Lawson (pictured) said SSAS scheme pensions will be forced to increase payments by at least LPI, which is capped at 2.5 per cent.
He said this will increase the costs of providing a SSAS by 60 per cent.
Rowanmoor Pensions managing director Ian Hammond says: “We have taken legal advice and despite early indications from the DWP that there was no intention to negatively impact SSASs, this has yet to be clarified.
“Until we are reassured that this is definitely the case, we will quote SSAS scheme pensions on this basis, which may mean lower benefits for some new pensioners. For those already in scheme pension, a level pension will be continued to be paid until we see the regulations.
“Whilst we understand the main purpose of the amendments is to strengthen the protection offered to members of larger group pension schemes the needs of SSAS members must be protected.
“As it stands, the Act penalises SSAS, whilst Sipps can continue to offer scheme pension on a level basis, as they are not occupational schemes under the Pensions Act. This contradiction must be addressed.”