Thumbs-up imminent on self-invested protected rights

Thumbs-up imminent on self-invested protected rights

The government is set to give the go ahead to people wanting to self-invest their protected rights pension savings later this year under regulations due out soon.

According to the Department of Work and  Pensions (DWP), draft regulations due to be finalised later this month (June 08) will open up the opportunity for savers to move their protected rights funds into self-invested personal pensions (SIPPs). The extra flexibility offered via the self-investment facility, will also allow consumers to invest their protected rights funds into commercial property.

This opportunity will give people more choice and the chance to consolidate their separate arrangements into one more manageable pension plan, thus reducing costs.

The DWP has axed a rule that requires people to leave their protected rights savings to their surviving spouse as part of its drive for pensions simplification.

Protected rights is the name given to money built up form national insurance rebates when people contract-out of the state second pension (formerly known as SERPS). Currently protected rights must be used to buy a joint life annuity, but from 2012, when contracting-out is abolished, the protected rights pension can be combined with other pension pots, which is also expected to drive down costs and provide more choice for consumers.

Works and Pensions secretary James Purnell recently speaking at the Association of British Insurers, told the delegates about the government's proposal to remove protected rights survivor's benefit rule. He said "By removing this rule, we can give greater clarity to the system, making one set of rules covering the whole of a person's pension savings, and making pension schemes simpler to run."

For more information on self investing your protected rights, please contact us.