Hargreaves Lansdown says the news is “potentially catastrophic” for insurance companies as protected rights funds make up around £100bn of the total £440bn in UK personal pensions and it says that to date insurers have enjoyed a virtual monopoly on managing these assets, although it is good news for investors.
Minister for pensions reform Mike O’Brien says: “These changes will give more flexibility and investment choice to people taking an active interest in the management of their pension fund.
“It will also be easier for individuals to transfer funds between different types of pension schemes, and to consolidate pension rights in one place.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “Sipps have already proved hugely popular in the past few years, showing very strong growth at a time when pension provision in general has been declining.
“This development is likely to accelerate demand, as investors will be able to take control of all their retirement savings in one place.”