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With the UK experiencing an ageing population, instances of dementia reaching new levels and the Government relentlessly adding to the complexity of pensions, we are seeing a trend in pension scheme members looking to delegate certain decisions to their nominated attorneys, via Powers of Attorney.
But what are the rules and regulations surrounding this option?
A Power of Attorney may cover decisions made by the donor in their following different roles within a trust-based pension scheme, including a Small Self-Administered Scheme (SSAS) and a Self-Invested Personal Pension (SIPP):
- Either an Enduring Power of Attorney (EPA) or a financial affairs Lasting Power of Attorney (LPOA ) can be used to delegate decisions that would otherwise be made by a member of the pension scheme (e.g. requesting to draw benefits, transfer out, or alter the amount of pension income); but
- A Trustee Power of Attorney must be used to delegate decisions made by a trustee of the pension scheme (e.g. choosing and agreeing an investment for the scheme, agreeing fund splits, and other trustee powers as shown in the Trust Deed and Rules ). This blog focuses solely on this type of delegation.
- It cannot last for more than twelve months;
- It should appoint someone to act as attorney in accordance with section 25 of the Act. Incidentally, the document should take the form of a deed; and
- Notice of the power must be given to the relevant people (usually the other scheme trustees and, if it has the power to appoint trustees, the principal employer).
In the meantime, engaging with your scheme administrator and obtaining proper legal advice should serve to minimise the occurrence of errors, where Powers of Attorneys are concerned.
- A trustee of a SSAS is expecting to be overseas for a number of weeks and so they delegate their powers purely for convenience, giving them peace of mind that essential paperwork will be attended to in their absence;
- A SSAS trustee’s health is deteriorating and they delegate their powers, allowing their attorney to attend to all trustee decisions/paperwork in readiness for the ailing trustee to transfer their benefits to a pension vehicle that does not require all members to be a trustee (e.g. a personal pension plan or a SIPP where the Operator is the only trustee). Importantly, the member should take financial advice as to which vehicle is most appropriate for their circumstances.
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