SIPPs to hold funds accrued by contracting out of state second pension

The government has opened a consultation on draft regulations which will allow self-invested personal pension schemes (Sipps) to hold protected rights, which are funds accrued by contracting out of the second state pension.

Sipps are regulated by the Financial Services Authority and existing restrictions preventing schemes from holding protected rights are now considered unnecessary.

Mike O'Brien, minister for pensions reform, said: "This proposed change will give people more freedom to choose where they invest their pension savings. It will remove a restriction on Sipp schemes which is no longer necessary and make it easier to transfer funds between schemes."

The consultation will close on 29 February 2008.