27 June 08 – SIPPs can hold protected rights from October – O’Brien
Investors will have more choice from October following changes to pensions rules allowing protected rights to be held in Self-Invested Personal Pensions (Sipps), Minister for Pensions Reform Mike O’Brien announced today.
The DWP has issued its response to the consultation on draft regulations allowing Sipps to hold protected rights.
Mike O’Brien said:
“These changes will give more flexibility and investment choice to people taking an active interest in the management of their pension fund. It will also be easier for individuals to transfer funds between different types of pension schemes, and to consolidate pension rights in one place.”
At present, individuals cannot transfer their ‘pot’ of protected rights into a Sipp. The view had been that rights intended to replace State benefits forgone - by people who contracted out of the State Second Pension - should not be subject to the risk that can arise from self-investment.
However, existing restrictions preventing Sipps from holding protected rights are now considered unnecessary following changes which brought all personal pensions - including Sipps – under the FSA’s regulation from April 2007.
Notes to editors
- The response to the consultation on the draft regulations is published today and is available on the Department’s website at http://www.dwp.gov.uk/consultations/2007/
- Regulations are planned to come into effect on 1 October 2008 and will permit Sipps to hold protected rights. These regulations will be laid in Parliament shortly. Protected rights are rights that derive mainly from the rebate of National Insurance contributions payable when someone contracts out of the State Second Pension.
- A self invested personal pension (SIPP) can be used by individuals to hold a wide range of investments from shares, gilts, unit trusts, investment trusts, insurance company funds and commercial property. They allow people to make decisions for themselves, or to use a financial adviser or stockbroker to handle the transaction for them.
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