Government changes rules to allow SIPPs to hold protected rights

Pensions reform minister Mike O'Brien said the changes would bring more flexibility and investment choice to "people taking an active interest in the management of their pension fund".

The announcement came as the department for work and pensions issued its response to the consultation on draft regulations allowing SIPPS to hold protected rights.

O’Brien said:" 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 Financial Services Authority’s regulation from April, last year.