SSAS, Master Trusts and Pension Scammers
SSASs are not regulated products, although the investments within may be regulated by the FCA. This means that a SSAS is effectively a Master Trust which can be subject to abuse by Pension Scammers. Pension Scamming has been on the increase since the introduction of the new Pension Freedoms in April 2015, and involves pension scammers trying to convince people aged 55 or over, who now have far more freedom to do what they can do with their pension, to invest in bogus schemes, which can result in the money being lost for good. This article looks at how we can help safeguard your SSAS from scammers.
Why is Pension Scamming so Attractive to the Scammers?
The Association of British Insurers (ABI) said that following the introduction of Pension Freedom, during April and May 2015, savers aged 55 and over took out more than £1bn from pension pots (which would normally have gone straight into annuities), while a further £800m was taken out by savers in the same age age group, using income draw down. With such huge amounts of money looking for good investment vehicles, it is not at all surprising that the pension scammers have multiplied in an attempt to get their hands on some of this money.
How to Safeguard Your SSAS
To safeguard your SSAS, we would recommend that you have in place an Independent Trustee, which we offer through PML Trustees, looking after the welfare of scheme members and guarding them against scammers. A High Court Ruling, however, has in our opinion, made it more important than ever to guard against the scammers.
Recently, for example, we have received a request from some SSAS members to transfer funds out of the SSAS that we run for them into a new SSAS which allows for members to benefit from investments personally and sometimes allows retirement before age 55. We have declined the request, but a recent High Court Ruling in the case of Donna Marie Hughes vs Royal London has gone against our industry ethos by ruling that it is not necessary for a person who wishes to transfer their pension to an Occupational Scheme (i.e. a SSAS) to have earnings from the employer linked to the scheme. It also confirmed that the scheme employer does not have to be trading.
The ruling, we believe, leaves the scammers to openly transfer a member’s assets to such a SSAS without an employer link, which, we believe, is not a helpful decision for us or our industry. This is because it will now be easier for individuals to move their money from legitimate schemes and possibly falling prey to scammers.
Contact us for Help and Advice with SSAS
If you are in any doubt about switching out of Pension Funds into a Master Trust which will cover several employers, please speak to us for help and advice. Contact us or call us on 0121 693 0690.