Small self-administered pension schemes (SSAS) “have gone far beyond the scope of the policy intent that created them”, according to The Pensions Regulator’s Andrew Warwick-Thompson
Commenting in a blog on TPR’s website, the body’s regulatory policy executive director wrote: “SSASs are exempt from many of the legal duties designed to protect members that are applicable to larger schemes.
“Further, the ease with which a SSAS can be established, and the minimal legal and reporting requirements for such schemes, has made them the vehicle of choice for criminals setting up a scam.”
Warwick-Thompson went on to call for more severe regulatory measures in response to the issue. “I believe that pension transfers to SSAS arrangements ought to be banned,” he said.
“In fact, to put a stop to their abuse, I believe that an outright ban on the establishment of any more SSAS arrangements also warrants serious consideration.”
In response, AJ Bell senior analyst Tom Selby agreed that stricter controls should be placed around SSASs to protect against scammers, but called for caution when it comes to such severe measures:
“There is nothing inherently wrong with a SSAS as a product and for many business owners, particularly where there are multiple people involved, they offer a level of flexibility and control that cannot be found in any other type of pension,” he said.
“Rather than destroying a legitimate pension savings vehicle that is used appropriately by many UK businesses, the government should reintroduce mandatory professional trustees for SSASs.
“This would make it very difficult for criminals to abuse the SSAS structure to facilitate pension scams and would protect savers without taking the draconian and ill-considered measure proposed by TPR.”
Self-invested personal pensions (SIPPs), Warwick-Thompson maintains, are a safer vehicle for consumers who want control over the investment of their pension pots.
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