Rowanmoor Pensions calls for the DWP to act quickly on Pensions Act regulations
5 December 2011
- Pensions Act brings “unsustainable and time-consuming bureaucracy”.
- SSAS pensioners may see a drop in pension income.
Rowanmoor Pensions, the UK’s largest independent Small Self-Administered Scheme (SSAS) provider and a bespoke Self-Invested Personal Pension (SIPP) and Family Pension Trust operator, is calling for the Department for Work and Pensions (DWP) to act quickly to bring in regulations to avert the unsustainable and time-consuming bureaucracy that will result unless SSAS are made exempt from new requirements under the Pensions Act.
The company also warns that until these regulations are defined, new SSAS pensioners may see a drop in their pension income.
The call is being made because of changes to the definition of money purchase benefits in this year’s Pensions Act. The changes mean that occupational money purchase (defined contribution) schemes, including SSASs, which offer scheme pensions, are to be classified as defined benefit scheme pension arrangements. This will impact on SSASs as under the Pensions Act, pensions paid by defined benefit arrangement must increase by Limited Price Indexation (LPI) each year (minimum of Consumer Price Indexation (CPI) and 2.5% for benefits accrued after 2005).
The DWP has said it will bring in regulations to remove these “unintended consequences” but until then Rowanmoor Pensions has confirmed that scheme pensions for new SSAS pensioners will be quoted assuming an LPI increase, reducing the level of the scheme pension to below the capped drawdown level.
Ian Hammond, Managing Director of Rowanmoor Pensions, said: “We have taken legal advice and despite early indications from the DWP that there was no intention to negatively impact SSASs, this has yet to be clarified. Until we are reassured that this is definitely the case, we will quote SSAS scheme pensions on this basis, which may mean lower benefits for some new pensioners. For those already in scheme pension, a level pension will be continued to be paid until we see the regulations.
“Whilst we understand the main purpose of the amendments is to strengthen the protection offered to members of larger group pension schemes the needs of SSAS members must be protected. As it stands, the Act penalises SSAS, whilst SIPPs can continue to offer scheme pension on a level basis, as they are not occupational schemes under the Pensions Act. This contradiction must be addressed.
“The regulations, implementing the Pensions Act need to ensure that SSAS are exempt from these requirements, otherwise the Government will find itself creating an unsustainable bureaucracy, which is open to continual, rightful and ongoing challenge by the industry.”
The primary purpose of the amendments in the Pensions Act is to strengthen the protection offered to members of larger group pension schemes which, on the face of it, appear to be money purchase schemes but actually provide a promised benefit from the member’s accumulated fund, and will ensure these schemes comply with the protective regulations too.
For further information on Rowanmoor Pensions please visit the website at http://www.rowanmoor.co.uk
- Ends –
For further information, please contact:
Rowanmoor Pensions
Robert Graves
Head of Pensions Technical Services
Rowanmoor Pensions
08445 440 667
robert.graves@rowanmoor.co.uk
Anna Hopkinson
Marketing Manager
Rowanmoor Pensions
08445 440 667
anna.hopkinson@rowanmoor.co.uk
Redleaf Polhill
Sally Walton/James Bishop
020 7566 6750
SW@RedleafPolhill.com
JB@RedleafPolhill.com
About Rowanmoor Pensions
- Rowanmoor Pensions provides and administers member-directed pension schemes:
- Small Self-Administered Schemes (SSAS)
- Self-Invested Personal Pensions (SIPP)
- Family Pension Trusts (also known as Family SIPPs)
- Rowanmoor Pensions is the UKs largest independent SSAS and Family Pension Trust practitioner and administers around 4,000 schemes.
- Rowanmoor Pensions’ SIPP features:
- personal, portfolio based, administration service;
- expert support from technical and sales consultancy teams;
- extensive flexibility and choice at retirement, including scheme pension;
- widest investment opportunities available in the SIPP market;
- integrated links to investment partners’ systems;
- streamlined process for settling adviser fees.
- Rowanmoor Pensions was awarded best SSAS provider in the 2008, 2009, 2010 and 2011 Investment, Life and Pensions Moneyfacts Awards.
- Rowanmoor Pensions was awarded best SSAS provider in the 2006, 2007 and 2008 Pensions Management Technology Administration and Service Awards.
- The Rowanmoor Pensions website is www.rowanmoor.co.uk
- Rowanmoor Pensions currently employs over 200 people.
- Rowanmoor Pensions is a trading name of Rowanmoor Group plc (No. 5792242).
- Rowanmoor Personal Pensions Limited, a subsidiary of Rowanmoor Group plc is the scheme Administrator and scheme operator for schemes established under a Rowanmoor Pensions Family Pension Trust and the Rowanmoor Pensions SIPP and is authorised and regulated by the Financial Services Authority (Register number 458260).
