A proposal from The Pensions Regulator to ban pension transfers into small self-administered schemes and to consider stopping new SSAS arrangements being set up have been branded “extreme” and “ill considered”.
In a blog on TPR’s website, regulatory policy executive director Andrew Warwick-Thompson suggests three measures to curb pension scamming, including a ban on SSASs.
Warwick-Thompson says: “SSASs are exempt from many of the legal duties designed to protect members that are applicable to larger schemes. Further, 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.
“SSASs have gone far beyond the scope of the policy intent that created them. Self-invested personal pensions, which are the subject of far tougher regulation by the FCA, are a safer vehicle for consumers who want control over the investment of their pension pot.”
He adds: “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.”
AJ Bell senior analyst Tom Selby agrees stricter controls should be placed around SSASs to protect against scammers.
But he says “TPR’s extreme recommendations risk throwing the baby out with the bathwater”.
Selby says: “There is nothing inherently wrong with a SSAS as a product and for many business owners, particularly where there are multiple people involved, they offer a level of flexibility and control that cannot be found in any other type of pension.
“Rather than destroying a legitimate pension savings vehicle that is used appropriately by many UK businesses, the Government should reintroduce mandatory professional trustees for SSASs.
“This would make it very difficult for criminals to abuse the SSAS structure to facilitate pension scams and would protect savers without taking the draconian and ill-considered measure proposed by TPR.”