Martin Tilley: Demystifying the Adviser Role in a SSAS

Small self-administered schemes (SSASs) turned 50 last year and it is fair to say that their popularity and endorsement has been mixed over that period. In their early years of the late 1970s and 1980s their flexibility saw their numbers soar and while changes in operative legislation and economic conditions saw SSAS popularity level out. It was the introduction and regulation of self invested personal pensions (SIPPs) from 2007 onwards which saw SIPP recommendations begin to overtake those of SSASs. There might be some justification for this, in that for single or some twin member schemes, the costs of one or two SIPPs might be less than that of a SSAS, but when the added features of a SSAS are factored in such as a loanback facility, single trust simplicity and member ownership, the case for their consideration for any business constituted as limited company stands scrutiny. Being a regulated product, many advisers are more comfortable recommending a SIPP or group of SIPPs to shareholders/directors/senior employees of corporates. Indeed, I am aware that some networks prohibit the recommendation of SSASs, which of course, being occupation pension schemes, fall into a different category of regulation and are often regarded as “too complex.” There is some justification for this. Both vehicles being registered pension schemes, the contribution limits and benefits are in the most part similar. However, SSASs, being trust based schemes, require a detailed knowledge of both trust law and the skills necessary to administer a multi-member scheme. With the wide-ranging roles that advisers undertake, these are simply more tasks for an adviser to master. This is where the mutually beneficial alliance of the professional trustee and an adviser can provide real value to the client, in roles that should complement, but not overlap. In the first instance, the adviser can provide advice to the owners and directors of a company in that a pension scheme can significantly reduce the tax liabilities of a business through contributions to a registered pension scheme. Whilst the same money purchase annual allowances apply to SIPPs and defined contribution SSASs, greater contributions can be applied to a defined benefit SSAS, or to a money purchase SSAS willing to allow contributions to a general fund. Having recommended a SSAS, the creation of, registration and overall running of it becomes the responsibility of the professional trustee. This would include all administration requirements and attendance of trustees’ meetings, where the strategy for the trust and for that of its members can be agreed. However, the critical point to remember is that a professional trustee is almost certainly not going to be regulated to provide investment advice. Indeed, they would have conflict of interests if they were. Trust law is clear in that where trustees do not have sufficient knowledge or expertise in any trust matter, they should seek advice from those who are. So, the selection of, and allocation of investments will require this knowledge to be obtained. Later in the scheme’s life, as the individual members approach the date at which benefits might be considered or drawn, the adviser steps into an additional role, in recommending the benefits that can be taken and when. This advice is of course ongoing throughout the period of drawdown and in fact beyond, since the cascading down of benefits to the next generation within the SSAS trust could require advice and management of funds for many years to come. I have heard that some advisers consider a professional trustee, which by their role must be expert if the matter of pensions legislation, to be a threat or overlap to the adviser role. In reality, nothing could be further from the truth. It must be recognised that a professional trustee can state factually what a SSAS can invest in, what benefits can be paid and the administrative methods of achieving company/trustee/member objectives, but they can do this in a guidance role only and without specific recommendation as the latter would be straying into regulated advice. We have many instances where, as a professional trustee, we have had to call upon the advice of an adviser to either a sponsoring employer, co-trustees or members related to our SSAS as without this advice, we cannot fully fulfil our own trustee responsibilities. Martin Tilley is chief operations officer at WBR Group martin.tilley@wbrgroup.co.uk

Martin Tilley: Demystifying the Adviser Role in a SSAS

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