Transferring protected rights funds offer consolidation benefits

Investors could miss out on the benefits of consolidation if they fail to take advantage of the new ability to transfer protected rights come the 1st October 2008, says Fidelity International.

For investors who want to prepare early for transferring their protected rights or open a Personal Pension or SIPP with protected rights, Fidelity is set to take applications from mid September - two weeks ahead of when the new regulation comes in.

By transferring to a fund supermarket SIPP or Personal Pension specifically, investors can enjoy five key benefits:

Consolidation: Investors can take a holistic and more strategic approach to managing their pension assets, while seeing them in one place, alongside their other investments;

Investment choice: a wider choice with access to top performing funds online;

A chance to review: Protected rights have often been the smaller portion of many plans and as a result have been sometimes under-utilised or overlooked;

Savings in time & cost: one set of costs within one overall plan;

Control: Investors will have greater access and control when it comes to their retirement planning.

David Dalton-Brown, Head of Fidelity's Direct Business said: "Investors will no longer have to suffer the frustration of having to split out non-protected rights funds or avoid transfers with any elements of protected rights.

"In fact, this further relaxation around protected rights rules presents investors with a significant opportunity. They will soon be able to shake the frustration felt since A-Day, that while protected rights became more attractive and flexible, they could not be held in the most flexible pension vehicles- SIPPs. For some it has even meant keeping two separate funds for income drawdown.

"Now, by transferring to a SIPP on a fund supermarket, investors can take advantage of all of the benefits of consolidation - saving them both time and money, as well as offering them added benefits such as better investment choice and being able to access income drawdown."

Protected rights are the funds built up by being ‘contracted out' of the State Second Pension (S2P). Protected rights funds used to be subject to various restrictions which have been gradually removed since A-Day. One of the remaining obstacles - holding protected rights within a SIPP - will be removed on the 1st October 2008.