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Surge in suspicious SSAS transfers following freedoms


The number of transfers to small self-administered pension schemes flagged as suspicious has more than doubled at AJ Bell following the launch of the pension freedoms.

There was a 140 per cent increase in 2015 compared with 2014 in SSAS transfer requests caught by the provider’s due diligence process.

AJ Bell says the reforms have been a “shot of adrenaline” for pension scammers with “bigger potential prizes” on offer.

SSASs have long been used for scams, typically using cashback or loan models.

However, some advisers are being frustrated by providers’ reluctance to accept transfers.

Financial Escape managing director Phil Castle is planning to go to the Pensions Ombudsman after Scottish Widows blocked a SSAS transfer because the member does not earn income from the scheme’s sponsor.

A spokeswoman says: “Scottish Widows reviews all pension transfer requests in accordance with its regulatory requirements and duty of care to its customers.

“As part of those checks, when a customer wishes to transfer to an occupational scheme, we will ascertain if the transferee receives remunerative earnings from an employer participating in the scheme.”

But Talbot & Muir head of pensions technical Claire Trott says: “It is not a requirement that they have to have earnt income in order to receive a transfer, many transfers into SSAS occur after the client has technically retired and they are tidying up their pensions.”


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There are 38 comments at the moment, we would love to hear your opinion too.

  1. What Clare Trott said is what every other pension technical specialist said from every SSAS specialist I spoke to check with that my understanding of the legislation was at odds with Scottish Widows stance. There is no statutory RIGHT to a transfer when there is no earnt income, the agreement to transfer is at the discretion of the provider’s Trustees, but to date, the only reason for NOT transferring Scottish Widows has given is because it is for them to decide. I would and will be arguing that as Trustees, if they have not carried out a full “Know your client” exercise, the Trustees may well be penalizing the member by exercising the discretion for their OWN commercial reasons.
    To add insult to injury, we )correctly) offered to enter mediation with Scottish Widows with TPAS providing a mediated solution, but Swids prefers to waste everyone’s time so that the decision has to be made by the POS instead. Even worse, Std Life after carrying out due diligence for the same reason (lack of earnings) and re-reassuring themselves this was NOT pension liberation carried out a larger transfer to the SSAS. The Swids one is just a paltry £7k!
    The person wanting to transfer has an Armed Forces Pension scheme which we would not DREAM of moving and having left last year is currently doing a degree and helping a commercial build of in her spare time for the SSAS which will be renting the property back to a family members business. ALL legitimate and above board and yet the SSAS is going to have to borrow more for the build than it needs to because they think they know best! Idiots….

  2. No requirement for earned income but it does seem a tad odd to allow occ scheme membership to a non employee.

    • Like a lot of things, this is something that was changed with FA(2004). It is allowable, and it means e.g. that family heads running a business can add family members as scheme members without having to put them on payroll. For that and similar legitimate reasons, it gets widely used in financial planning. (My SSAS is even named after my daughter – who’s 5 – and she’s certainly not on payroll).

  3. Christine Brightwell 22nd January 2016 at 7:59 am

    SSAS have historically been used by families who run businesses. Many SASS have been running perfectly legitimately for decades – yes decades. But of course can only have up to 12 members.

    Perhaps it would be better to stop panicking and ask sensible questions of the SASS, many of which still have an independent trustee, when a transfer is proposed.

  4. Most prudent SSAS providers treat transfers like they do under SIPPs, even although they ate unregulated contracts. Surely HMRC should be involved here at the SSAS approval stage, using “fit and proper person laws???

    • There are three Trustees on the SSAS concerned, one is the family member who owns the business (It is a financial services firm), one their spouse and the other is the relation who wants to transfer her small £7k Scot Wids PPP to the SSAS and knows more about Occupational pension Schemes than the family advisory firm due to her background on restructuring the occupational pension scheme of one of her previous employer’s who has over 100,000 staff…… and yet Scottish Widows Trustees are exercising their discretion to refuse a transfer with no reasoning other than “because we can”. Idiots

    • The ONLY reason a SSAS was decided upon rather than a SIPP for the commercial property purchase was so that there would be the option in the future of the SSAS lending money to the current business OR the lady’s new business when she sets it up in 2 years when finishes her degree (she left HM Forces last year). No intention of lending at present, but if a SIPP had been used and subsequently a loan was required, there would have had to be another transfer from SIPP to SSAS.
      Were it a transfer of a Swids PPP to a SIPP they would not have discretion so by future proofing for the member, Swids are being able to use their undeserved discretion to refuse to transfer. She could transfer to a different PPP or SIPP provider who actually use their brains and then move it to the SSAS, but neither she nor I like playing silly games with IDIOTS who have the right to be discretionary idiots,just as we have the right to be discretionary awkward and make them justify their actions and refusals. IDIOTS

  5. It’s even been pointed out to Scottish Widows that as this is a family firm where a family member is assisting with the commercial property’s development both with the SSAS and physically with helping clearing the site for development as there are trees and undergrowth which needs removing and she and her husband like using their chainsaw and are harvesting the firewood for their log burner(unpaid), the employer could actually pay them £1 through payroll and then there WOULD be a statutory duty to provide a transfer and Scottish Widows would no longer HAVE any discretion, but neither them or I want to play their silly games and Scottish Widows seem to prefer this having to go to the Pensions Ombudsman for a ruling. Idiots…….

  6. This is directly from the TPAs website

    “Small self-administered pension schemes (SSAS) are generally set up to provide retirement benefits for a small number of a company’s directors and/or senior or key staff. They can be open to all employees and their family members, even if they don’t work for the employer. The number of members is generally limited to 12.”

  7. We have offered Scottish Widows to have TPAS mediate but Swids prefer it to have to be resolved by the Pension Ombudsman and have declined mediation. Idiots

  8. Hi Gordon, it does, but please have a look at the test case from 2013 between PI Consulting (Trustee Services) Ltd, Dalriada Trustees Ltd and The Pensions Regulator. Basically the Court ruled that an Officer (Director) of a Company falls under the ‘Employee’ definition, even when that company (Sponsoring Employer) is Dormant, providing there is the INTENTION to trade in the future.
    The long and short is that we need an HMRC maintained and published Approved Scheme Administrator list. Let’s not forgot that by the end of this month we’ll all have had to supply the required declarations to HMRC ‘that we meet the Fit & Proper test’ in order to file the returns that are due, then my money’s on HMRC investigating each Admin firm from that point on and hopefully putting together a nice list of those of us who do things properly. We can only hope!!!

    • No we don’t. That would be like the ‘closed shop’ nature of the failed ‘pensioneer trustee’ regime.

      The current regime now works. HMRC are quite effective at vetting schemes, especially where the administrator is new. (When I first applied, I ended up supplying CV and Certificates!) Conservative minded advisers are able to go to established SIPP firms with SSAS arms whilst new entrants can set up in the SSAS business with ease as long as they’re able to demonstrate the credentials.

      The problem here is with Life Companies and the culture of trying to lip read what they think Regulators are saying, rather than looking at what is clearly written down.

  9. It is quite ironic that this page has a Scottish Widows ad over it.

  10. There has been an upturn in transfer requests with Pensions Freedom, and so its natural that there are more requests for transfers to SSASs.

    A few years ago when FCA was first leaning on SIPP providers to stop taking witty ‘investments’, we saw an upturn in the old ‘set up a faux Ltd Co and then a SSAS’ trick for unemployed miners and other odd cases so they could liberate their funds or invest in the Magic Geared Dubai Parking Space Growth Fund, or timber harvesting on the Moon. HMRC waived them through.

    But this just doesn’t happen now. s.153 has been amended to allow schemes to be rejected by HMRC if they do not look and smell legitimate and do not have ‘fit and proper’ administrators. Unless the Scheme Admin are known to HMRC as a regular legitimate firm, each SSAS registration application is scrutinized in detail as to the people behind it, who’s idea it was, how it will invest its money and so forth.

    Also, think about pensions liberation for a while. People did this because they wanted their money, and in doing so ran the risk of huge tax charges and certainly large upfront fees. If you’re impacted by the Pension Freedoms, why would you want to do this? – you can instead just pay legitimate & much lower fees and tax charges.

    Life Companies see any SSAS transfer as ‘suspicious’. I’ve known cases of experienced business people trying to use a SSAS in conjunction with their own company to receive visits from the Police after Life Company bozos have shrieked “Its not a big club pension investing in dogcrap managed funds – it must be a scam!”. They’re ‘suspicious’ because they don’t like them or don’t understand them. But there has been no increase in SSASs used for scams since the pension freedoms – quite the opposite.

    I’m afraid it should be blindingly obvious – even to the poorly managed low achievers who still work for Life Companies – that a transfer to a SSAS established in the past 2 years, and involving an FCA authorised firm as an adviser (like Phil Castle) or an FCA authorised SIPP provider (like Talbot & Muir) are prima facie legitimate transfers, not suspicious transactions.

  11. Every true SSAS provider would love the liberators wiped out in some way or form so that those of us who are doing it right are no longer inadvertently accused of being liberators. Just because SSAS is not regulated and because the big insurers don’t understand it doesn’t make it wrong. I live in hope that HMRC provide an approved list of Scheme Administrators. What I really struggle with, is reading the Ombudsman decisions that back the insurers time and time again on the “earner” issue. There is no legal requirement for this, but just because they aren’t an earner does not automatically mean the client has been duped and everyone is waiting to run off with their money through the back end of an “investment”. All the big insurers are really concerned about is losing AUA and finding a reason to stop the transfers. I suspect Scot Wid didn’t go to TPAS because they know PO are backing them on this poor decision and the mediation might say otherwise!

    • I agree, I suspect Swids are worried about haomeraging funds as they bought business from some advisers by paying uneconomically high commissions following stakeholder coming in (we didn’t use them as bribes don’t work with me and their an awful company to deal with at the best of times)

      Because Scottish Widows have refused mediation and the courts don’t like a refusal to mediate, it is actually tempting to challenge them in court over this rather than involving the POS at all. Trustees may well have discretion, but they have a duty to exercise that discretion in the interests of the MEMBER and NOT the insurer and when they exercise discretion, no judge I suspect will think it unreasonable for the Trustees to be able to justify the reason for their decision as to how to exercise that discretion. St the moment the answer is not due to any concern over pension liberation, simply because THEY have the discretion and the member doesn’t UNLESS they go on payroll, which they can tomorrow, but why should they just to appease these idiots.

      • I forgot to say, the irony is that those they bribed for the business are probably the “advisers” who left the industry just before RDR and have been working with the liberators to churn the bribed money!
        I think we have a total of 15, yest that’s 15 plans for clients with Scottish Widows, so if they get funny and refuse to talk to me going forward for being a “PITA”, then I will not be too upset.

    • I certainly think there is truth in the anti-competitive tendencies of these old Life Companies.

      I’m still sceptical about the ‘approved administrator’ list. Isn’t this a way of bringing back the old PT closed shop? Or do you mean (?) you’d like to see such a list, with an intro from FCA/TPR saying “These people are legitimate so stop feigning concern and handover the money!”

  12. Legislation clearly allows for this transfer. Scot Wids would prefer to hold onto their client’s money against their wishes and best interests. We’re also seeing this recurring theme amongst the comments of what MIB points out as a ‘closed shop’ mentality from within the SSAS industry. Again, against the best interests of clients.

  13. MIB – Why are you so against an Approved List? Are you worried that you won’t be on it? Maybe if you used your real name then folks might not be so suspicious.
    It is a little worrying that you perceive FCA Regulation as being the be all and end all, especially as there is no RELEVANT permission for SSAS Administrators to hold. In their F&P Guidance HMRC clearly state that they have more investigative powers than the FCA, so in theory you could have the situation where a Provider is regulated by the FCA (Holding the Pension Admin Permission), but not deemed Fit & Proper by HMRC.
    Despite disagreeing with most of your posts I do agree that all Investment Advisers advising on Tax Relieved Pension Funds, should be regulated by the FCA. OK it’ll be a huge headache for those involved in making the rules. However, on the flip side of that, we have taken over a SSAS from an FCA Regulated IFA Firm / SSAS Administrator that had charged an originally £100k SSAS, over £30,000 over the past 3 years with the only piece of advice being the Establishment of the SSAS (by their Sister company, which is a surprise!) and a simple Loanback (sorry, Pension Led Funding!). So that isn’t the be all and end all either.

    • I’m not a SSAS Practitioner, so I’m not personally fussed about whether my name appears or not. I do however provide certain services to those who are, including new entrants. My concern is with the ease of competitors being able to enter a market: that is what drives good consumer outcomes, afterall.

      If the suggestion with an approved list is to make it easier for SSAS firms to cut through Life Company obstruction, then I can see value in the idea.

      As for your point about HMRCs powers, that is my point entirely. HMRC has the power to properly vet new SSAS schemes and new Administrators. Hence why a scheme established in the last two years should generally be considered bona fide. *Add* to that point – not instead of it – the involvement of an FCA authorised adviser or the fact that the people behind the SSAS provider run an FCA authorised SIPP provider, and that should be prima facie evidence that the transfer is legitimate.

      Not sure where you got the idea that I am advocating FCA regulation of SSASs or SSAS advice per se. Its unnecessary, and frankly SSASs & SIPPs were better regulated pre-2006 when HMRC had firmer views on investments (and FSA was concentrating on stoking-up the banking collapse). But as it is, if you want to advise somebody to transfer a pension into a SSAS, with the exception of other money purchase occupational schemes, that’ll be regulated activity (either Art.53 or Art53E), just as its regulated activity to tell any SSAS trustee (ie. retail investor) to invest the SSAS monies into anything ‘specified’ like a collective.

  14. Scottish Widows can’t say we didn’t try to resolve this.


    Just to confirm, I have spoke to the relevant people regarding Mediation and this is not something we would offer.



    From: Phil Castle []
    Sent: 07 January 2016 10:41
    To: , Barry
    Subject: RE: Scottish Widows

    — This email has reached the Bank via an external source —


    I just wanted to check you were declining using TPAS’ mediation service before contacting the POS as the more appropriate procedure should be mediation first which TPAS provide?

    Please confirm the Trustees are declining any form of mediation.

    Phil Castle

  15. MIB I’m not suggesting an approved list in a turn about back to pre A-Day requirements, but essentially a place for transferring schemes to raise queries as part of the their due dil on the underlying Scheme Admin. Preferably one that doesn’t take HMRC 6+ months to reply to.

    Once an insurer knows a scheme administrator is trusted by HMRC then the insurers should not be withholding transfers to that firm. There has to be an easier way for firms to check who is or is not legitimately looking after a persons pension.

    As part of F&P, HMRC are meant to be reviewing each and every Scheme Administrator, surely this information and results of it can be stored for easy recall in a phone call with a provider who wants to check the firm asking for the funds?!

  16. In Military Training they say “train hard fight easy”, i.e.fight the battles when the outcomes don’t matter too much and there is not too much to loose. My case is a classic one in that it is just 7k and if Scottish Widows want to go against what every SSAS provider I have spoken too’s interpretation of the rules and Trustee responsibilities, then this is probably a good case to use to set a precedent and argue to the wire. If any lawyer specialising in this sort of thing would like to consider taking on the fight pro-bono, then please contact me as whilst there is no point in us paying for fees to fight this in court as it is just a 7k transfer, we’ve got lots of enthusiasm to set a precedent with dinosaur life companies operating a closed shop.
    My friend JP and I did something similar with the FSA/FCA when arguing that a firm could and SHOULD mention the 15 year longstop in their client agreements as the FSCS applies it if a firm ceases to trade and in the end the FCA backed down and accepted JPs wording.

  17. Not sure what line FOS would take if the provider allowed a transfer in this situation, and it transpired that it WAS a scam.

    • Are you referring to the specific case I am highlighting then Dave B as a potential scam, or just highlighting that Scot Wids have a dilema?
      Scottish Widows by giving no explanation as to the reason for their exercising of discretion are giving the impression to the member concerned that this IS a potential scam, which bearing in mind the consumer is my sister in law and I know this is NOT a scam, could give the impression that either I don’t know a scam when I see it OR I am part of the scam!
      It doesn’t matter WHAT position FOS would take, they are NOT the regulator, the rules or the law and the discretion the trustees have is to act in the most appropriate manner for the consumer and NOT the way least likely to cause a problem from the insurer!
      I had a chat with my sister in law over the case at Sunday lunch and she said don’t waste my time (not her time) over £7k, it’s not worth losing sleep over, BUT it’s the principle of the matter which gets us both and hence she said take it all the way to the POS or even to court if someone wants to handle it pro bono as Scottish Widows have refused to even mediate via TPAS.

      • SW will no doubt have some very good reasons to prevent this transfer. Pretty sure they are not desperate to hold on to 7k.

        As a side point another flag of potential issues is where advisers “go off on one” and get all shouty. I have seen that, in many cases (I am in no way suggesting yours) the adviser in question is up to no good or not being entirely open as to what is going on.

        • They haven’t given any reason other than because they have discretion as it is not a statutory transfer AND they have refused to enter any kind of mediation.

  18. True FOS are not the regulators, but if customers invest badly and lose their money they do not go to the FCA.

    If the providers has suspicions but still allows the transfer to proceed, I doubt the FCA will step in to support the provider.

    If people have the right to force through a transaction despite provider suspicions then there must be enforceable indemnities.

    • Yes, I agree it’s a dilema, but Swids will not discuss or mediate, it is just a case of”talk to the hand” as far as they are concerned and they have not undertaken any KYC exercise before deciding THEY no best for the member, when in fact they are doing this because of the risk to THEM and not to the member, which clearly is a breach of their duties to the member as they are putting themselves FIRST.

  19. Philip Castle. Clearly I refer to the dilemma.

  20. So theoretically I am a business owner, and I set up a pension scheme for me to put my savings into, and I want to include other members and I plan to use some of the funds to invest in ways that help my business and potentially give me better growth than I can get investing in the mainstream markets (commercial property or business loans- all perfectly allowable under the rules) and this is all set up and I have an advisor that helps me and then when I want to do these things, my household name provider and trustee decides they wont let me do it- why??- because there are some crooks in this world and they are trying to protect me- really!!! They are paid to be trustees and ensure that what I invest my pension money into is within the rules of the HMRC and to take some reasonable steps to make sure there is nothing fraudulent here- but then surely aren’t their obligations over and shouldn’t they then carry out my instructions or those of my advisor? I wonder if these providers could say hand-on-heart that they don’t have their own agendas here or are they just running scared again of regulatory rebuke as so many others are?? either way- not really treating customers fairly and these are professional and knowledgeable business people so they are noticing how stupid that all sounds. Surely just a bit of common-sense being applied in this case would have been a far better solution.

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