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MI says life companies don’t understand protected rights

It is not the Government’s response which is muddled but companies being unable to comprehend the regulation’

Industry confusion over the Government’s proposals to allow protected rights in Sipps is due to insurers’ lack of understanding of the issue, says Merchant Investors.

The DWP delivered its long-awaited announcementin early January and Merchant Investors says the news should be seen as is a fillip for the industry, particularly after Chancellor Gordon Brown excluded resid- ential property from Sipp investment.

Many in the industry criticised the Government’s response to the consultation, Pensions: Contracted-out Benefits and Miscellaneous Amendment, labelling it confusing and unclear.

Hargreaves Lansdown head of pensions research Tom McPhail believes the main confusion is over the date of implementation which appears to be April 2007. Several commentators say it is still not clear what assets Sippholders will be able to invest their protec- ted rights in, with some life offices saying investment restrictions are still likely.

Merchant Investors marketing manager George Ladds says: “We strongly believe that there is no con- fusion concerning Sipp protected rights. In fact, the Government response to the consultation clearly indicates that self-investment via an insured product offered by an insurance company is an effective vehicle.

“In summary, it is not necessarily the Government’s response which is muddled but other companies being unable to fully comprehend the regulations.”

Norwich Union head of pensions Iain Oliver says: “Sipp specialists will natu- rally have a different pers- pective on this to us. This is because they will currently have a Sipp scheme but not an appropriate scheme. Therefore, if they want to hold protected rights, they have to obtain a scheme certificate from the DWP and produce a new product to hold the protected rights under their scheme, which must not allow self-investment. This would explain people’s uncertainty.”

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