Today is the first day that around £100bn of protected rights money currently sitting in insured funds can be consolidated into a registered pension scheme including a SIPP.
Protected rights are funds built up by being contracted out of the State Second Pension with average pot sizes around the £30,000 mark.
Before today, the funds had to be invested separately but the rules have now been changed so this money can be moved into existing pension plans.
Many SIPP and pension providers have been gearing up for today for some time; setting up systems to allow advisers and clients to submit applications in advance to move protected rights on October 1.
However, although today presents huge opportunities for advisers as their clients decide how to invest their protected rights funds, there are still problems which need to be ironed out.
IFAonline has previously reported on industry criticism of the Government for failing to go the “whole hog” on allowing protected rights investment in SIPPs.
Pension commentators were angry that administrators will still need to track protected rights separately from other rights until at least 2012. Rachel Vahey, head of pensions development at AEGON Scottish Equitable, described the DWP’s failure to act on this issue as “disappointing” and urged the Government to act now “rather than wait until 2012”.
Many advisers had also expressed concern the administrative burden of moving the funds may be too much for some providers. Results of a recent poll conducted by IFAonline showed 36.36% of advisers feared long delays while 31.17% were concerned about delays from some providers.
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