Pointon York Sipp eyes £18m protected rights

Pointon York has lined up £18 million in protected rights funds to go into its Sipp, fuelling hopes of another personal pensions windfall when investment rules are relaxed later this year. 

In December the Department of Work and Pensions introduced draft regulations which would allow individuals to transfer protected rights money into Sipps, where it could be invested in a wider range of funds and assets including shares and commercial property. Currently, the money can only be held in a restricted range of insured funds, bank deposits and mutual funds such as unit trusts or Oeics.

In preparation for the changes Pointon York has set up a scheme to accept protected rights following strong demand from advisers. It has already taken on 20 clients and has 300 clients in the pipeline, who are using the protected rights changes as an opportunity to take out a Sipp for the first time.

With an average fund size of £60,000, the firm will take on assets of £18 million on top of money from these clients’ other pension sources. Funds will be invested in cash deposits, AA-rated bonds and gilts until the legislation is passed.

Christine Hallett, chief executive of Pointon York Sipp Solutions, said: ‘I think a lot of people have left their protected rights pot behind and aren’t too keen for them to sit with insurance companies.’

Mike Morrison, pensions strategy manager at Winterthur Life, said protected rights will boost demand for Sipps but is concerned that the relaxation will encourage people with small protected rights funds to go into Sipps.

‘With the FSA (Financial Services Authority) looking at the suitability of Sipps, would they be better off going for a Sipp or a normal personal pension? Arguably they would be better going into a normal personal pension with that sort of money.

‘I think you should apply the same principles [to protected rights funds] as you should apply to any other pensions. Most people wouldn’t offer Sipps below £50,000 so why put protected rights into Sipps?’