The DWP has issued a consultation document on the draft Personal Pension Schemes (Appropriate Schemes) (Protected Rights) (Amendment) Regulations 2008:. The closing date for responses is 29 February 2008, and the DWP aims to publish a summary of responses within three months of that date.
The consultation document proposes to:
- permit self-invested personal pensions (SIPPs) to hold protected rights from October 2008; amendments are to be made to the Personal Pension Schemes (Appropriate Schemes) Regulations 1997 (SI 1997/470); and
- amend the Personal and Occupational Pension Schemes (Protected Rights) Regulations 1996 (SI 1996/1537) to remove the provision that permits a survivor's annuity to continue to be paid to any other person if the survivor dies during a five-year guarantee period, as this is now prohibited by the Finance Act 2004.
SIPPs are currently prohibited from holding protected rights on the grounds that rights which are intended to replace S2P should not be subject to the risk that can arise from self-investment. However, now that SIPPs are regulated by the FSA (since April 2007), the government considers that there is sufficient consumer protection in place for the restrictions on SIPPs to be lifted.
These proposals, if implemented, are likely be of limited duration, given that the Pensions Act 2007 provides for the abolition of contracting-out on a DC basis, probably from April 2012.