For most pension holders, their primary aim is to save (and generate) some pounds to fund retirement. A whole host of investments might be used along the way, but the ultimate goal is to facilitate a retirement income.
Small self-administered schemes (SSASs) are a whole different beast. While they are still a pension product, they have certain features that make them appealing to company directors in the here and now. SSASs, for example, can be used to purchase commercial property, which makes them an attractive option for business owners who are failing to find funding from banks. They can also be used to offer loans to the sponsor company, as detailed on page 69.
But there is strong debate over the future of SSASs and their place in today’s market. Some see them as an incredibly useful tool for small firms, particularly in difficult economic conditions. Others view them as old-fashioned and on their way out. Either way, the market is alive and kicking, with hundreds of SSASs set up each year. Funds under management now total more than £15bn.
The market is not without its challenges, however. Since the removal of the pensioneer trustee role in 2006, numerous SSASs are without a professional administrator. This is leading to trustees tripping up and incurring penalties that could have been avoided with proper supervision. And the constant tinkering of pensions legislation is causing both providers and trustees regular headaches.
With so many challenges, is the market showing growth, stagnation or a steady decline?
Game of numbers
This year has seen a significant increase in the number of providers participating in the survey, with 43 – compared with last year’s 29 – supplying information. This is in part due to help from the Association of Member-directed Pension Schemes, the trade body for SSAS providers, which published our survey to all its members and encouraged participation. The SSAS market is well known for its numerous small providers, and this helped reach a number of firms that might otherwise have fallen beneath the radar.
Although many of the companies that have taken part have very small books compared with the larger providers, the survey shows the vast spread of SSASs available across the country and the different service models they offer.
But some notable names declined to participate this year. Legal & General, which usually responds to our survey and last year had £392.1m assets under management, chose not to take part. It said that it is remaining in the SSAS market, but was not in a position to release information at present.
Another large provider missing from the list is Standard Life, this time with a definitive reason. It plans to stop writing new business at the end of 2013, saying advisers no longer recommend its SSASs. “Although there is still a market for SSASs, this is a specialist market and not a core market for Standard Life and the adviser firms we work with,” says Alistair Hardie, head of pensions accumulation at Standard Life. “We find our advisers now recommend our Sipp or wrap offerings instead.” The firm says it has no plans to sell its existing book of business that totalled £489.2m in last year’s survey.
