Investor take-up of new rules allowing the transfer of protected rights into a SIPP has been encouraging, Fidelity FundsNetwork says.
The fund supermarket says one in five investors in its advised SIPP have transferred their protected rights in the last year, with a further 11% of direct investors following suit.
Protected rights are the funds built up by individuals who were ‘contracted out' of SERPS or the State Second Pension. Government restrictions on where protected rights contributions can be invested were lifted in October last year, enabling transfer to SIPPs.
"Since the restrictions were lifted last year, we have seen a steady flow of protected rights money come into our SIPP as investors have made the most of the opportunity to consolidate their pension pots and make their money work harder for them," Peter Hicks, head of UK retail sales at Fidelity International, says.
From 2012 protected rights will be abolished and people will no longer be able to contract out. Instead, the money will stay in the second state pension.
This will mean that existing protected rights pots will only grow if the underlying investment is working for you. For people who still have not transferred, they may want to consider doing so in order to consolidate their pensions and have access to a range of investment options.
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