The government has confirmed that, as from 1 October 2008, protected rights can be held in self-invested personal pensions (SIPPs) and there will be the ability to invest in all assets that currently are available to non-protected rights funds.

At present, individuals cannot transfer their protected rights into a SIPP. The view had been that rights intended to replace State benefits, forgone by people who have contracted out of the State Second Pension, should not be subject to the risk that can arise from self-investment.

However, these restrictions are now considered unnecessary following changes from April 2007, which brought SIPPs under the Financial Services Authority’s (FSA) regulation in line with all personal pensions.

Head of financial planning Robert Gofton-Salmond says, ‘Our view is that the current regulations unnecessarily restrict investment choice and the new flexibility will be received very positively by those who wish to take an active interest in the management of their pension fund.

‘There is reputably £100 billion in protected rights funds, mainly held by insurance companies, that could potentially be more actively managed. It will also be easier for individuals to transfer funds between different types of pension scheme and to consolidate their pension funds.’