S2P to SIPP

The Department for Work and Pensions has today published its response to the consultation on the proposals for amendments to protected rights and appropriate personal pension regimes. The upshot is that S2P entitlements will be freed from the constraints which have been in place for the past two decades.

 

Given the woeful investment performance displayed by the providers who have had the exclusive rights over contracted out rebates, the change will be welcomed by many. An estimated £100 billion will now be released for investment elsewhere and subject, in the main, only to the constraints of FA 2004 regime for personal pension schemes.

  

Transfers of S2P entitlements will be permitted from 1 October 2008. Existing and new SIPPs will be the main recipients of transfers. For the more sophisticated pension savers, it is difficult to envisage any problems, but one wonders whether, for others, it could be the beginning of another mis-selling scandal with less scrupulous advisers encouraging inappropriate moves towards the opening of SIPPs.