The Government has allayed fears of another pension U-turn by pledging to press ahead with protected rights changes proposed by the DWP.
The move could eventually enable an estimated 10 to 12 million people, with between £75bn and £100bn in protected rights savings, to invest the money in Sipps.
The DWP announced proposals in a consultation paper last September to remove restrictions on protected rights and bring them into line with voluntary savings.
The Government then appeared to pour cold water on the proposals in the annuities market report accompanying the pre-Budget report. This made no mention of the DWP proposals and merely reiterated concerns that lifting restrictions on protected rights could potentially leave the surviving partner with no private pension.
But during the second reading of the Pensions Bill, Work and Pensions Secretary John Hutton said: “During the bill’s passage through Parliament, we intend to take powers to enable us to remove the complex rules governing rights accrued in contracted-out defined-contribution sch-emes, following the outcome of the review of the open market option for annuities that we expect to be completed by the end of the year.
“The removal of those rules will simplify the management of rights for schemes and members, reducing costs to schemes and supporting our aim of simplifying pension regulation,” he said.
Some commentators believe the DWP will review whether protected rights should be available in a Sipp once Sipp regulation, due in April, beds in but will remove other restrictions in the short term.
Scottish Widows head of pensions development Ian Naismith says: “I always thought that people were reading too much into the pre-Budget statement and introducing an element of conspiracy theory that never existed.”
Winterthur Life pensions strategy manager Mike Morrison says: “The DWP never made any promises to remove the restrictions on protected rights any time soon. This was always a mid-term promise.”
But Standard Life marketing technical manager Andy Tully says: “The Government has still watered down its commitment to removing the restrictions. It might not have said so in print but we expected the changes to come into force this year. The Government has made absolutely no commitment to timescales.”