Protected Rights SIPP changes due in October 2008

Richard Ellis, Head of Sales and Marketing at Merchant Investors comments on the Protected Rights SIPP changes due in October 2008: "Self-investment of Protected Rights in SIPPs is not something new; it has in fact been possible, through the right kind of SIPP, since Personal Pensions were first introduced in 1988.

"Our research suggests there is a lot of confusion amongst financial advisers; in 2007 just 22% of financial advisers surveyed, correctly believed you could fully self-invest Protected Rights if you used the right type of SIPP. A year on we repeated the survey and this figure had increased only slightly to 31% - still demonstrating a significant gap in understanding. It does make sense to create a level playing field, but before everyone rushes off to invest their Protected Rights advisers need to study the devil in the detail.

"One of the most interesting short term effects this new legislation has is that Protected Rights held in SIPPs will still need to be separately identified from other funds until further rule changes are made in 2012. For some providers this will not create a problem but for others having to identify Protected Rights and Non Protected Rights will mean system upgrades. Ultimately this could mean some providers may not be ready by October 1st.

"So although this is great news for the investor, I would suggest a degree of caution. But it will be fascinating to see how the industry and fellow providers adapt and move on over the next few months in light of this change."