The Department for Work and Pensions has declared that Sipps are a mainstream pension scheme and they should be allowed to hold protected rights.
In the DWPs response to its consultation – Pensions: Contracted-out Benefits and Miscellaneous Amendments – it stated: Sipps are no longer necessarily high charge and high risk investment vehicles and there should be no restrictions on Sipps holding protected rights.
The DWP received commentary and suggestions from 18 firms during the consultation period. But while the move has been applauded, industry experts believe there is still more work to be done.
Commenting on the announcement Standard Life head of pensions policy John Lawson said: “Standard Life is absolutely delighted that the DWP has recognised Sipps are now mainstream pensions which do not present any additional risk to investors than any other pensions. Allowing protected rights to be self-invested is a major step forward in making pensions simple. However, other differences between protected rights and non-protected rights remain, such as the requirement for unisex annuities and spouse’s pensions, and we would encourage the DWP to look at these aspects too.”
As the situation stands it will not be until April 2007 when Sipps become regulated when the schemes will have the ability to invest in a wider range of investments other than life assurance company funds.
Suffolk Life sales and marketing director John Moret, does not fundamentally disagree with Lawsons sentiment, but overall he is disappointed. He said: It is yet another instance of unnecessary delay. It is not an issue which will go away, especially when you look at final salary schemes winding up.