Should You Switch to a Different Pension Scheme
Author: Christopher L. Mcculloch
As of October 2008, protective right pension schemes can be transferred into Self-Invested Personal Pension (SIPP) schemes. The SIPP providers are expecting a large influx of new SIPPs due to this new change in law.
SIPP providers believe this will increase since more people are opting out
of the state second pension schemes known as SERPS. In 1998 6 million people
left the SERPS for private protective right pension schemes.
Protective right schemes used to be part of the state pension because they
received rebates from the National Insurance Contributions. Before, the
government insisted that funds in protective rights schemes had to be carefully
invested. The government did not think it was right to risk the people's
pensions. This left SIPPs out in the cold since SIPPs invested in a wider
range of potentially dangerous funds like commercial property.
The Department for Work changed this policy in 2007. Under the new policy
protective rights pensions can be invested in Self-Invested Personal Pensions,
thus opening up more opportunities for the average person. However, protective
funds must be indentified and kept separated from other types of funds.
While protective rights funds can now be transferred it SIPP schemes, the
laws regarding access to the funds have remained unchanged. The existing
laws on the benefits remain the same and are not expected to change anytime
soon.
If you are unsure whether your pension is held in a protective right fund,
you can contact a financial advisor. If you think you may have opted out
of the second state pension, you can also contact Her Majesty Revenues and
Customs.
Whether you know or not, contacting an independent financial advisor is
a good idea. They can help you decide which pension scheme is right for
you based on your individual needs. This is your life retirement we are
talking about. You will want to best advice available so you can make sound
financial decisions about your future.
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