Restrictions on self-invested personal pensions (Sipps) have been lifted to allow protected rights pension pots to be invested in the schemes. This means people who contracted out of the state earnings-related pension scheme (Serp) in the 1990s can now move their pension pots into Sipps.
The change to pensions regulations came into force in October. Tom McPhail, head of pensions research at Hargreaves Lansdown, said it helps build the case for employer group Sipps.
Previously, the government deemed self-invested schemes as too high risk to allow protected rights funds to be invested in them.
However, the restrictions were thought to be unnecessary after all personal pensions, including Sipps, came within the remit of the Financial Services Authority (FSA) last April.
Employees have two years to take advantage of these changes, as contracted-out Serps will be abolished as part of wider pension reforms in 2012.
McPhail said the new rule change will encourage employers to enable staff to transfer shares bought on the maturity of a company sharesave scheme into a group Sipp. He added: “This is good for employers with existing sharesave schemes [which] are looking at the option of group Sipps. It’s all about keeping it simple and putting people in control as far as possible. Having one pension is good because the more pensions you’ve got, the more complicated life gets.”