Money which was re-directed in this way was known as âProtected Rightsâ â as distinct from âNon-Protected Rights,â which was the part of a pension which came from an individualâs own contributions and/or from the contributions of an employer.
Gradually, however, the popularity of this type of arrangement has tailed off and from April 6th this year the option to re-direct funds into a personal pension in this way will no longer be available.
However, many people â especially high-earners â have built up significant amounts of Protected Rights using the previous arrangement. Many will now be thinking that the only option from April 6th is to leave the funds where they are, keep an eye on their performance and take the benefits as and when they retire. But as one door closes, so another opens and new rules introduced from April 6th will give those people who have Protected Rights benefits the chance to transfer the funds if appropriate into Self Administered or Self Invested pension funds.
These schemes â Small Self Administered Pension Schemes and Self Invested Personal Pensions â give the individual investor much greater control over his or her pension and allow a much wider range of investments, including commercial property and individual stocks and shares. If you are a company director, then in some cases it may also be an option to make loans to the company, with repayments then being made to your pension scheme. Additional flexibility also exists when considering the options at retirement to provide benefits.
This is a complicated area of pension planning, and one where specialist advice is very much needed. However, if you have built up benefits within a Protected Rights policy then it would certainly be worth contacting us, as we believe that it would be worthwhile considering the opportunity to consolidate your pension arrangements to obtain potentially greater growth, control of the investment strategy and flexibility in the way in which benefits can be generated from the funds.
