Protected rights boost for SIPP market, says Fidelity

Investors with money in protected rights are determined to make the most of the new freedom to move their money into SIPPs, according to new research from Fidelity FundsNetworkTM.

The long-standing rule that restricted holders of protected rights money, which has been estimated as £100bn, to life insurance company funds, which was originally intended to protect investors, was lifted on 1 October 2008.

However, investor concerns over poor performance and the new threat of market value reductions - in essence exit charges - of as much as 25% of the value of an individual's holding are clearly compelling many to move their money to a more flexible home, namely the SIPP market.

The research by Fidelity FundsNetworkTM demonstrates investors are doing just this:

Less than one in ten (9%) respondents was very happy with the performance of their protected rights pot and a further 28% had no idea how their money had performed.

Well over a third (38%) will either move their protected rights money into their SIPP or open a new SIPP in order to do so.

A further third of investors (33%) would consider opening a SIPP for their protected rights money.

Less than 8% of respondents were happy to leave their protected rights money untouched.

As many as one in five (19%) would face exit charges by their incumbent provider and a further two in five (40%) were unsure whether they would or not. The research found that these charges could top 25%.

David Dalton-Brown, Head of Fidelity FundsNetwork, said: "The research confirms our expectation that, despite both market conditions and the burden of exit penalties of up to 25%, protected rights holders are determined to take more control of their money and move it to a more flexible home.

"More modern vehicles like SIPPs not only offer greater control, with a wide range of investment options for example, but they also enable consolidation of holdings, saving time and money, and making asset allocation decisions that much easier."

Protected rights are the funds built up by individuals who were ‘contracted out' of SERPS or the State Second Pension. Protected rights funds used to be subject to several restrictions but these have been gradually removed since A-Day.For more information, including a free guide on transferring protected rights money into a SIPP, visit fidelity.co.uk or telephone 0800 085 0923.

Investors who are unsure whether they have received any protected rights contributions should call the HM Revenue & Customs ‘contracted out' pension helpline on 0845 915 0150 and quote their National Insurance number.