Decision Regarding Protected Rights & SIPPs

The Minister for Pensions Reform, Mike O'Brien, has announced that from 1 October 2008, protected rights funds and future contracting-out rebate will be allowed to be held in SIPPs and therefore have unlimited self investment. Now that SIPPs are regulated by the Financial Services Authority it was felt that the restrictions currently in place were no longer necessary.

The requirement to include a spouses pension still remains, until 2012 however, so accurate records, effectively ring fencing the Protected Rights, will need to be kept until then. What are Protected Rights? Protected Rights is the term used to refer to money that has built up within a Personal Pension Plan as a result of opting out (known as ‘contracting out') of the State Second Pension Scheme (S2P) or its predecessor scheme - the State Earnings Related Pension Scheme (SERPs). By opting out of these state schemes, the individual will receive a lower state pension; however, in exchange, a rebate of their National Insurance payments is paid into their appropriate pension scheme. Dentons have already taken steps to amend its scheme documentation, to enable application for the appropriate status to hold protected rights in the Dentons SIPP, however we do not propose that future rebates will be accepted into our SIPP.