The UK government has dropped plans to issue a blanket ban prohibiting all self-invested pension plans from holding protected rights in resp...

The UK government has dropped plans to issue a blanket ban prohibiting all self-invested pension plans from holding protected rights in response to comments from respondents to the UK’s Department for Work and Pensions consultation document, Pensions: Contracted-out Benefits and Miscellaneous Amendments. This means that, for the time being, the only contracted-out personal pension scheme which can offer SIPP-style choices for protected rights is an insured product offered by an insurance company. The DWP added that while the UK government accepts developments in the SIPP industry makes this form of pension provision more suitable for a wider range of people than previously, it claims that as protected rights are the result of contracting out of the state second pension, it is appropriate that “a higher standard of prudential regulation” should apply to contracted-out personal pension schemes. The UK government will, however, review the position again, “once the current consultation on regulatory arrangements has concluded and the new arrangements are in place”. It also plans to introduce revised amending regulations from April 2006, so that a SIPP plan can be held in the “wrapper” of an “appropriate scheme” without invalidating the scheme’s contracting-out certificate.