SIPP season boosted by protected rights money, says Fidelity

Holders of protected rights money are continuing to transfer it into new and existing self invested personal pensions, says Fidelity FundsNetworkTM. Around one in four of the platform's SIPPs now includes protected rights money, and this element averages £26,000.

On 1 October 2008, protected rights holders were at last given the freedom to transfer out of insurance company funds and into a SIPP. At that time, FundsNetwork research suggested around a third of investors with protected rights would take the opportunity to move this money at some point.

Now, despite prolonged volatility in global markets, evidence suggests holders of protected rights money are continuing to migrate to SIPPs. In 2008 FundsNetwork alone saw a 64% increase in SIPP applications and a 23% rise in SIPP assets under administration, a significant proportion of both being protected rights money transferred in the last three months of that year.

For investors who have not yet opened a SIPP, a special FundsNetwork offer means that investors with £150,000 and over do not pay any annual administration fees. The offer runs until 5 April 2009 and means qualifying investors can save £260 a year - or £6,500 over 25 years.

This new money coming into SIPPs is being invested broadly in line with non-protected rights money: generally across the asset and risk spectrum but with a bias towards fixed income and other income generating funds.

Peter Hicks, Head of UK Retail Sales at Fidelity International, says, "Many protected rights holders are voting with their feet - where they are not shackled by exit fees they are looking to shed existing funds and choose SIPPs instead. Given the rules changed less than six months ago, and in that time we've seen yet more market volatility, this is very encouraging and could well be a significant trend in the run up to the tax year end.

"SIPPs offer many advantages over old-style insurance company funds. They have more investment options, though corporate bonds are clearly in favour at the moment, they are more transparent, their charging is more flexible, there are no harsh exit penalties, and they offer the opportunity to consolidate a number of smaller plans.

"Advisers with clients who might benefit from opening a SIPP can take advantage of FundsNetwork's special offer. This slashes the annual fee for new applications, saving investors thousands over the long term, and is perfect for protected rights holders, given many will have amassed a very large pot over the years."

Transferring protected rights money to the FundsNetwork SIPP is simple and straightforward. It works in the same way as a non-protected rights transfer, with no maximum limit.