Friends Provident offers reassurance to pension customers

From tomorrow, Wednesday October 1st, new regulations will allow investors to transfer any "protected rights" into Self-Invested Personal Pensions (SIPPs) for the first time.

Protected rights are pensions savings accumulated by consumers from the benefits they receive when they contract out of the state additional pension.

In anticipation of this, the FSA has set out its expectation that providers give suitable advice to help customers make informed decisions about transferring built-up NI insurance rebates into SIPPs.

Friends Provident, one of the first providers to launch a SIPP option open to protected rights 12 months ago, recognises that current economic uncertainty is going to make investors even more cautious about making the right decisions, especially when it comes to stability of their financial providers.

Jeremy Ward, head of pensions marketing at Friends Provident said: "In some scheme types, the level of compensation which could be paid to the investor should the pension provider or operator collapse is far lower than that afforded to investors via an insured SIPP. With an Insured SIPP, such as the SIPP option offered by Friends Provident, investors are protected by the Financial Services Compensation Scheme which covers up to 90% of the assets in the scheme with no upper limit.

Trustee SIPPs are only protected up to a maximum of £48,000. Given the events of the last few months with large multi-national banks failing, investors have become increasingly conscious of the need to protect themselves against such a loss. Our own insured product gives the higher level of protection, a fact that we should ensure is made widely known by our distributors and investors to help them make the best decision on where to place their investments".