Forbes Solicitors
April 2019  SIPP/SSAS eNews

Watch This Space - Changes on the Horizon in 2019


Property Transactions Involving Pension Schemes: Capital Allowances Considerations


How do you know if a SIPP investment is suitable – what do you need to think about?

How Could Pension Scheme Trusteeships Look in the Future?

Recent surveys and high profile campaigns have highlighted changes in the pension's landscape across the UK.

The role of a pension scheme trustee is more challenging than ever with funding, regulation and many other hurdles to overcome.

What is a pension scheme trustee?

A pension scheme trustee is a person or company, acting separately from the employer, who holds assets in the trust for the beneficiaries of the scheme. They are responsible for ensuring that the pension scheme is run properly and that members' benefits are secure.

A recent survey undertaken by RSM:

RSM's pensions team surveyed almost 200 trustees of UK pension schemes to understand how the role of today's pension scheme trustee is changing. They highlighted that today's trustees are frequently stuck between a rock and a hard place of moral obligation and ever-changing industry standards, but that there is also plenty of cause for optimism for the sector.


Property Transactions Involving Pension Schemes: Capital Allowances Considerations

An issue that should be considered by the parties in all property transactions is the impact of any capital allowances, which can be claimed over expenditure on "plant and machinery" in a property as a means of saving tax. Although a pension scheme is a non-tax-paying entity, enquiries should still be made into potential capital allowances claims whether the pension scheme is acquiring or disposing of a property.

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Watch This Space - Changes on the Horizon in 2019

Whilst the impact of Brexit is still uncertain there will no doubt be implications for the pension sector. Here is an update from our Employment Team:

While Brexit currently dominates the majority of our discussions, updates and most frequently, the news, there will be a number of Employment Law developments for businesses to watch out for over the next 12 months.

Post-Brexit Immigration rule changes

Once the UK leaves the EU free movement will cease to exist. In practice, this is likely to be delayed pending legislation to repeal the current arrangements. However, it will also take time to put in place the practical arrangements necessary to make this possible.

A 'settled status' scheme has been introduced by the government in which EU workers already in the UK will be able to live and work in the UK indefinitely.

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What do you need to consider when it comes to choosing suitable SIPP investments?

When looking at the suitability of investments, historically, most self-invested personal pension (SIPP) providers’ due diligence involves looking at compliance with pension scheme legislation. Therefore, they would be focusing on areas not suitable for SIPP investment in general, such as residential property and connected loans. It is also important to ensure commerciality where there is any connection between the SIPP member and the investment or investment provider.

Now, while these areas remain absolutely key, of course, it is becoming clear many SIPP providers have not been extending suitability considerations to individual client circumstances. Therefore, once an investment is deemed to fall within permissible pension regulations, there seems to be very little – or indeed any – individual consideration.

It’s clear to see that – to ensure suitability – SIPP providers (like we do at Mattioli Woods) look at not only the investment itself, but the suitability for each individual client, typically taking into account factors such as:

  • the investor’s previous investment experience and expertise
  • a portion of their SIPP and wider wealth to be invested
  • any fixed sources of income
  • timescales to retirement (particularly with illiquid investments)
  • source of business: e.g. has there been input from a regulated financial adviser? And how did the investor come across the proposed investment?

What to do if you find yourself in a bad investment?
It can be difficult for investors to identify at any early stage whether an investment is not as expected or promised. Indeed, implausibly strong or consistent investment returns are some of the hallmarks of investments that are not as they seem, such as Ponzi schemes.
By contrast, the majority of investment classes will suffer fluctuations in performance over the short‑to‑medium term, so – opposite to what investors may think – this is not necessarily a cause for concern. Therefore, if in doubt, an investor’s first port of call should be to seek advice from a regulated financial adviser. A regulated adviser will be able to not only review the investment itself but also the ongoing suitability for a particular investor, and therefore whether they should continue to hold or seek to exit.

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The content of this e-alert is merely informative and should not be relied upon as a substitute for legal advice