Getting ready for the big time

While he was still chancellor, Gordon Brown earned himself something of a reputation for making U-turns where pension regulations were concerned.

Despite the stated intention of levelling the playing field, actually what he achieved was to plough it in a different direction. One of those U-turns which initially snuck under the radar was the one of protected rights being allowed to be held by self-invested personal pensions - or all Sipps anyway. Pension A-Day in 2006 was proposed as the day this would be allowed, although the department of work and pensions quietly announced a few weeks beforehand that it had no intention of permitting this because Sipps - other than those operated by insurance companies - were not regulated by the FSA. While this was a bitter pill to swallow, the line of reasoning was basically sound and accepted by most.

So, when Sipp regulation by the FSA commenced a year later in April 2007, everyone was primed, ready and eager to get going. "Oh no you don’t" said the DWP, and gave a rather more spurious reason why - because protected rights had to be invested in cash and collectives which would only be allowed through an insurance company arrangement. "Bah," said the Sipp industry, "foiled again."

It was therefore with some relief that the DWP consultation paper on Sipps and protected rights was issued in December 2007. It was also announced that the results of this consultation would be released in mid May. Of course, by mid May there was no news except for talk of delays, and it was with even greater relief that the paper was finally published on the 27 June. At a refreshingly brief 16 pages, the main points made were:

•Sipps will be allowed to hold protected rights, and the effective date is 1 October 2008 as originally stated in the December consultation document.

•Protected rights will be permitted to be invested in the full range of Sippable investments.

•The protected rights "pot" must be tracked separately and used to pay a 50 per cent spouse's pension when used to purchase an annuity, if applicable.

•All other retirement options will be available.

•Some minor points were made regarding dependant's benefits.

•Small self administered schemes, however, will not be able to hold protected rights - this was never really on the menu.

The department of work and pensions invited applications for contracting out certificates from Sipp providers and made the suggestion that early applications would be welcomed to speed up the application process. Naturally, their amended application forms were not ready and no one in the relevant department at HM Revenue & Customs had been informed, but never mind.