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News
SIPPS OPEN UP
When personal pensions were launched in 1988, one of their most important features was that they could be used to opt out (technically 'contract out') of the state earnings-related pension scheme (SERPS). Contracted-out personal pensions then received national insurance rebates that were allocated to 'protected rights' funds.
When SERPS was replaced by the state second pension (S2P) in 2002, the opt-out option continued. Since 1988, personal pensions have also been able to receive transfer payments from contracted-out final salary (defined benefit) pension schemes and contracted-out money purchase (defined contribution) schemes.
However, until 1 October 2008, only insured personal pensions could hold protected rights funds. Thus, nearly all self-invested personal pensions (SIPPs) were excluded from receiving national insurance rebates or a full transfer from a contracted-out pension scheme. Regulations have now removed this restriction.
The new rules mean that you now have the opportunity to transfer existing insured protected rights funds into a SIPP, potentially gaining greater investment control and benefit flexibility. Your protected rights funds might currently be held in old plans to which rebates have not been paid for some years -contracting out has steadily become a much less attractive option since 1988 and is now rarely recommended. The insurers may themselves have closed to new business, taking their administrative
and fund performance out of the spotlight reserved for new investments.
While it is definitely worth examining what protected rights benefits you have, a transfer to a SIPP may not be the right option. The final decision depends on several factors, including:
• Do you have an existing SIPP to which the transfer could be made?
• How long do you have before you would draw benefits from the protected rights fund?
• How do the existing pension plan charges compare with SIPP charges?
• How important to you is the wider range of investment opportunities a SIPP can offer?
• How do you plan to take your protected rights benefits?
• Will you lose any benefits or suffer penalties by making the transfer?
We can help you find the answers to these questions.
Time to File Online
If you received a paper tax return for 2007/08 in April and have not yet sent it back to HM Revenue & Customs, it is now too late to do so. The final date for submitting a paper return issued in April 2008 was 31 October 2008. Your only option now is to file online. The cut-off date for this is 31 January 2009. However, given the problems experienced in January 2008 with last minute filing, you would be well advised not to wait until the deadline is only hours away to log on.
When personal pensions were launched in 1988, one of their most important features was that they could be used to opt out (technically 'contract out') of the state earnings-related pension scheme (SERPS). Contracted-out personal pensions then received national insurance rebates that were allocated to 'protected rights' funds.When SERPS was replaced by the state second pension (S2P) in 2002, the opt-out option continued. Since 1988, personal pensions have also been able to receive transfer payments from contracted-out final salary (defined benefit) pension schemes and contracted-out money purchase (defined contribution) schemes.
However, until 1 October 2008, only insured personal pensions could hold protected rights funds. Thus, nearly all self-invested personal pensions (SIPPs) were excluded from receiving national insurance rebates or a full transfer from a contracted-out pension scheme. Regulations have now removed this restriction.
The new rules mean that you now have the opportunity to transfer existing insured protected rights funds into a SIPP, potentially gaining greater investment control and benefit flexibility. Your protected rights funds might currently be held in old plans to which rebates have not been paid for some years -contracting out has steadily become a much less attractive option since 1988 and is now rarely recommended. The insurers may themselves have closed to new business, taking their administrative
and fund performance out of the spotlight reserved for new investments.
While it is definitely worth examining what protected rights benefits you have, a transfer to a SIPP may not be the right option. The final decision depends on several factors, including:
• Do you have an existing SIPP to which the transfer could be made?
• How long do you have before you would draw benefits from the protected rights fund?
• How do the existing pension plan charges compare with SIPP charges?
• How important to you is the wider range of investment opportunities a SIPP can offer?
• How do you plan to take your protected rights benefits?
• Will you lose any benefits or suffer penalties by making the transfer?
We can help you find the answers to these questions.
Time to File Online
If you received a paper tax return for 2007/08 in April and have not yet sent it back to HM Revenue & Customs, it is now too late to do so. The final date for submitting a paper return issued in April 2008 was 31 October 2008. Your only option now is to file online. The cut-off date for this is 31 January 2009. However, given the problems experienced in January 2008 with last minute filing, you would be well advised not to wait until the deadline is only hours away to log on.