Protected rights are now allowed in Sipps, but some providers are charging extra, it has been found.
A number of investors looking to transfer their protected rights money into their self invested personal pensions (Sipps) are being hit with additional costs, according to Merchant Investors.
It found that four weeks on from the relaxation of the rules on protected rights investment, some Sipp providers have yet to come up with "innovative" solutions to reduce the costs associated with operating different accounts for protected rights and non-protected rights. They are therefore having to pass on these costs to their customers.
Protected rights are accrued when an individual contracts out of the state second pension through a personal, occupational or stakeholder pension plan.
Traditionally, Sipp investors have had to hold their protected rights benefits in a separate pension scheme. But on October 1st these restrictions were lifted in a move the government claimed would provide more flexibility for pension savers.
However, Merchant Investors points out that while the new legislation has been welcomed by investors and financial advisors, extra fees could put them off investing with certain providers.
"It is clear that with many providers, especially those previously unable to accept protected rights, advisers and clients could be faced with a growing list of fees as those providers get to grips with investing this new money," said spokesman Richard Ellis.
