October legislation changes - Protected Rights
Following the legislative changes on 1st October, we now accept transfers of Protected Rights into these products:
- Single Investment SIPP
- Full SIPP
- Flexible Income Pension Plan (FIPP)
The following form must be completed to make a Protected Rights transfer.
There will be no transfer in fee for Protected Rights money. We are required under the new legislation to “ring-fence” the Protected Rights element of the scheme so that we are able to determine the value of the Protected Rights portion whenever required. To cover these costs, we will charge a nominal annual administration fee of £100. This will be in addition to the annual renewal fee (£250 for Single Investment SIPP, £490 for full SIPP / FIPP). We will allow the Protected Rights monies to be invested in any HMRC permitted investment which does not attract a tax charge e.g. commercial property, Genuinely Diverse Commercial Vehicles (GDCVs) and unlisted shares.
We will not allow members to contract out under our SIPPs and therefore do not accept Protected Rights rebates. Any rebates that were requested by a previous scheme before the monies were transferred to us will be accepted as these will form part of the transfer value from the ceding scheme.
SSASs cannot currently accept Protected Rights as the DWP class SSASs an occupational scheme and the new legislation only relates to SIPPs. However, it is possible to hold Protected Rights money in a Hornbuckle Mitchell SIPP which can sit alongside a Hornbuckle Mitchell SSAS and be used for joint investments.
FIPP
Each FIPP is established as an individual scheme with HMRC. We will therefore need to apply for an Appropriate Scheme Certificate on an individual basis once we have been informed that Protected Rights funds will be transferred into the FIPP. It is important to note that we can only apply for the Appropriate Scheme Certificate once the FIPP has been established.
Once we have received the certificate, we can accept Protected Rights transfers. Please note until we have received the certificate, we will only be able to accept non-Protected Rights into the FIPP. Whilst Protected Rights funds can be used for USP and ASP (depending on the member’s age), HMRC will not allow Protected Rights funds to secure a Scheme Pension. Hornbuckle Mitchell will be able to split the funds so that Scheme Pension is secured by the non-Protected Rights funds and USP/ASP (as appropriate) is paid from the Protected Rights funds.
Fees for regular pension payments will be charged for both the Scheme Pension and USP/ASP parts as we will be doing two sets of calculations – please refer to the fee schedule for full details.
Hornbuckle Mitchell Protected Rights Personal Pension (PRPP)
This is a stand alone personal pension scheme and is not connected to any of our SIPPs. It was established as an interim measure to accept Protected Rights transfer values prior to the change in legislation. As such, this is a restricted plan whereby the only investment choice is a deposit account with Butterfield Private Bank and there is no facility to draw an income from the scheme (e.g. USP or ASP).
If any of your clients are invested in this plan, you may want to consider transferring them to one of our more flexible products. There will be no charge for an internal transfer and where clients transfer to an existing SIPP the annual fee of £100 will be charged on a pro-rata basis until the SIPP renewal date, if this is different to the renewal date of the PRPP.
In order to transfer from the PRPP the member must complete both our standard letter confirming that they wish to transfer and a HMRC form CA1554. Upon receipt of these we will close the Butterfield bank account and transfer the money. (NB this will be when we are able to accept Protected Rights into our SIPPs).