“When you consider the complexity of pensions – even for professionals – there is a big dose of trust that you are reporting correctly,” says Robert Graves, head of pensions technical services at Rowanmoor. “If you don’t even understand what you are reporting, you may inadvertently slip up. This is why a lot of the industry would like to see the return of the pensioneer trustee – it would certainly help prevent any deliberate abuse.”
Lack of advice was highlighted by 10 per cent of providers. They pointed out that, with the particular complexities of SSASs, those setting one up would benefit greatly from solid financial advice in all aspects of the process. Due diligence was also raised by 7 per cent of respondents, specifically around ensuring a suitable security for loanbacks.
Burgeoning appeal
Even putting these issues aside, SSASs face significant struggles on the promotional side. While there are some big players in the market, there are many smaller firms that rely on word of mouth to gain business rather than actively selling their wares.
There are – or were – undoubtedly issues among intermediaries, too. The commission structure of pensions seen in the pre-RDR world did not sit well with SSASs since it was typically based on funds under management. While this is fine if most investments are made into collectives or shares, a good chunk of many SSAS funds are used for purchasing commercial property of the trustees’ business or loanbacks. It is difficult to make a commission remuneration structure work with such investments.
In the post-RDR world, commission is off the table and fees must be agreed upfront. This suits SSASs far better. “We are beginning to see a turnaround where advisers and accountants are recognising that the SSAS is still a valid tool for small businesses,” says Rowanmoor’s Mr Graves. “We are hoping the RDR will bring IFAs back into the fold for that.”
In terms of setting up new SSASs, company directors are already accustomed to writing out cheques for services, so paying upfront for advice on creating a SSAS will not come as a surprise. And with so many options in the market, that advice can really add value.
