Stephen McPhillips: Baby boomers and their pensions

When it appeared SSAS could disappear in the 1990s, baby boomers fought hard to have the government allow them to continue, writes Stephen McPhillips, and now, despite SSAS being seen as the ‘vehicle of choice for scammers’, there is still demand for carefully controlled investment choice and flexibility

Although I am a fraction too young to fit into the category of ‘baby boomer’ – generally considered those born between 1944 and 1964 – I have been involved in self invested / member directed pension schemes for all of my working life and have met hundreds of clients of that generation. I have seen first-hand how such schemes can hugely benefit them – often allowing them to neatly dovetail their own financial planning with that of their businesses.

Historians argue boomers were the wealthiest generation up to that point in time and, in my experience, such wealth enabled them to commit significant amounts of company and personal money to pension schemes. With this pension wealth, many sought to find alternatives to traditional life office managed funds and ventured into assets such as direct commercial property investment, direct equity investment, loans, etc. – initially through small self administered schemes (SSAS) and then, more popularly, through self invested personal pensions (SIPPs), when these came along in 1990.

In the very early days of SSAS, some invested in esoteric areas such as classic cars, fine wines, works of art, antiques, and so on. Not surprisingly, HM Revenue and Customs (HMRC) (in its previous forms) pretty much put an end to many of these more off-piste investments with the publication of Joint Office Memorandum 58 in 1979. This framework was further strengthened with the passing of the SSAS Regulations in 1991 – a piece of legislation designed to put into law many of the “do’s” and “don’ts” of self investment. The legislation also reduced HMRC’s discretion to approve certain investments which were required, back then, to be submitted formally to it as a fait accompli.

The system worked and some SSAS pensioneer trustees (a specific HMRC term which applied to SSASs before pensions A-Day in 2006), who had established themselves in and around 1979, welcomed the SSAS regulations as additional firm guidelines to be followed. Admittedly, there was a period of adjustment as pensioneer trustees and sometimes HMRC themselves, sought to interpret lines of legal text in the statutory instrument.


Such was the usefulness and popularity of SSAS to clients, that when it seemed at one point in the 1990’s they might disappear as a concept, members of the boomer generation fought hard, and with a strong lobby, to have the government allow them to continue. That was good publicity and thankfully it worked. SSAS had largely a very good reputation among those fortunate enough to be in a position to establish and fund one – and there was little talk of failed investments, rogue providers and pension scammers.

Of course, boomers grew up with the birth of the internet, but it was in its infancy back then and there were fewer lines of communication around at the time. In the 1990’s, I was hand-writing memos with blue carbon paper underneath, to create a carbon copy for the filing cabinet. For those generation Xs and millennials reading this, yes, I am that old.

The world has moved on since then, as of course it should, and I have finally gotten rid of the blue ink from my hand, but it saddens me to read – almost on a daily basis – of recent issues affecting member directed pension schemes. These include mis-sold SIPPs, failed investments, unscrupulous unregulated introducers vigorously promoting fiendishly complicated investments (often in obscure global jurisdictions), large increases in SIPP-related complaints to FOS and impacts on the FSCS. This is not good publicity for the industry, and it has a big impact on advisers – particularly the FSCS impact.

Despite SIPPs potentially becoming “the new PPI” and with all the negative connotations and radio commercials this brings with it, and despite SSAS being viewed as the vehicle of choice for pension scammers, it is heartening to note that the world is continuing to move on. HMRC’s tightening of new SSAS registrations is firmly in place, pension cold calling has been banned and the FCA has very recently stated that there is a place in the market for a wide range of investments. Respected and responsible providers will continue to grow as adviser and client demand for carefully controlled investment choice and flexibility continues.

Stephen McPhillips is technical sales director at Dentons Pension Management.