The problem of there not being a Pensioneer Trustee does not just relate to those schemes who deliberately “orphaned” themselves at A-Day but also to the more recent establishment of new schemes. The process to register a new occupational pension scheme is very simple; anyone can set up a company, establish a Ssas and register it with HMRC, take transfer values from previous pension arrangements and then either invest that pension scheme’s monies in such a way as to gain personal benefit or, in the extreme, to merely strip all the money straight out of the pension scheme and effectively disappear.
While a more common form of pension liberation and one with which the pensions regulator is concerned, is where an innocent member of a pension scheme is persuaded to transfer into an inappropriate arrangement to enable them to take cash out of their pension scheme before they are legally entitled to do so, this is a more sophisticated and personal fraud. Were there a requirement today for a Pensioneer Trustee to be appointed for every Ssas, then this specific area of pension liberation and abuse of pension scheme registration could be closed immediately.
In 2005, the government also decided that, as it had concerns about residential properties being introduced as investments of self-administered pension schemes, they would ask the FSA to regulate not only insured personal pensions but also Sipps. This covered both the sale of Sipps by intermediaries and the administration of Sipps by authorised operators. The new regulations came into force with effect from 6 April 2007, but the regulators have significantly widened their remit on Sipps (both the selling and the operation) with the protection of the customer and their expectations being paramount. This appears to be a far cry from the original intention as to why the FSA was originally asked to look into the regulation of the Sipp market.
This of course means that a Ssas and a Sipp are differentiated in a fundamental manner as one is regulated by the FCA while the other is not regulated at all. It could be argued that this gives the Ssas market an advantage so there are those who call for Ssasses to be similarly regulated. However it is important to bear in mind that one of the significant benefits of a Ssas over a Sipp is the ability to make loans back to the sponsoring employer.
Imagine the difficulties that would be encountered by both member trustees and professional trustees of small schemes, if loans to the company had to be subject to serious due diligence as to whether this was specifically for the benefit of the member or for the benefit of the employer, given the fact that the directors of the employer will almost certainly be the trustees of the scheme and also its members. While there may be conflicts of interest at present among these various categories, the additional imposition of FCA regulation on member protection, could impact significantly on the small self-administered scheme market.
