It says, “The FCA is cracking down on Sipp providers and their practices and procedures and many Sipp providers are, as a result, tightening their asset acceptance lists. As a result of this, the non-regulated salesmen who have made a living pitching high-risk and sometimes wholly inappropriate unregulated investments at unsuspecting Sipp members will probably turn their attention to SSASs.
“This, coupled with the apparent ease with which a SSAS can be misused for pension liberation leads to the belief that it won’t be long before some action is taken by either The Pensions Regulator or HMRC to prohibit these practices.”
While wholly supporting any action to preserve the good reputation of the SSAS industry and additional regulation, or indeed the requirement of a regulated administrator for example, Dentons hopes that any action, if and when taken, is appropriate and not excessive. It says it particularly hopes it does not overly increase the administrative cost burden, which ultimately will be borne by the client.
Pensions liberation has remained one issue firmly on the minds of providers, with many survey respondents claiming it is an issue.
Xafinity says it is its biggest concern. “This is high profile with HMRC at present and it has made it clear to providers that it expects their assistance in identifying any potential liberation vehicles – whether that be transfers or investment.
“To this end, we have developed robust processes (in conjunction with The Pensions Regulator’s guidelines) and carried out extensive training of staff in order to allow us to move readily identify potential liberation vehicles,” the firm adds.
Plenty of optimism
But it is not all doom and gloom. Rowanmoor says there are plenty of points for optimism. Purchasing a commercial property as a pension investment has been growing in popularity and it is likely to remain popular, but with the further lowering of the annual allowance, it is more likely that individuals will have to pool their pension funds, the firm says.
“The SSAS, with its common investment fund structure, is ideal for joint investments like property. Furthermore, it is likely that the Sipp market will contract in terms of those providers allowing investment into commercial property if the FCA’s proposals to class property as a non-standard asset goes ahead.”
This is because allowing property would increase a Sipp operator’s capital adequacy requirements, which may not be viable for some providers. Rowanmoor says this could result in greater use of SSASs for property purchase.
The firm points out the RDR may have also boosted interest in SSASs from financial advisers whose business models have shifted from remuneration based on funds under management, to one of charging fees for advice given. “SSASs do not suit the funds under management business model but have historically always supported the payment of fees through a client agreement.”
