Protected rights?

cyclonebri1

Sorry for the numptie question, but can someone explain exactly what is meant by protected rights? This is in context of my opted out of serps policy with L&G.

:xmastree: :xmassign: :xmastree: :xmassign: :xmastree: :xmassign: to everyone,

jem16

This article might help.

http://money.uk.msn.com/guides/asktheexperts/retirementplanning.aspx?cp-documentid=5832636

cyclonebri1

jem16 wrote: »

This article might help.

http://money.uk.msn.com/guides/asktheexperts/retirementplanning.aspx?cp-:confused:

dunstonh

When you contract out of SERPS or S2P it is identified in your pension as protected rights. Your personal contributions are shown as non protected rights or ordinary rights.

How specific do you want your answer to be?

cyclonebri1

dunstonh wrote: »

When you contract out of SERPS or S2P it is identified in your pension as protected rights. Your personal contributions are shown as non protected rights or ordinary rights.

How specific do you want your answer to be?

Now, now, I did say numptie question?

Specifically then,

Is the opted out/serps fund the only way a fund can be protected rights?

I take it there is no benefit from this, ie, no "protection" other than that of the spouse as when taken this has to provide for him/her?

Confusion emanated from the answer in the link that refers to other funds.:money: :easter_os

suez_channel

Is the opted out/serps fund the only way a fund can be protected rights?
Yes, that's right
I take it there is no benefit from this, ie, no "protection" other than that of the spouse as when taken this has to provide for him/her?
Yes, there is no specific "Life Assurance" incorporated in this.

The protected rights fund will be invested in a fund or funds of the insurance company or (a more general name) the "pension provider" - for example, a with-profits fund, a tracker fund, a managed fund or whatever you choose. The fund in the event of death before retirement is paid to legal spouse or other beneficiary/ies. When this type of contract first came out it meant the fund *had* to be used to provide a widow's or widower's pension but it can be paid as a capital amount.

I haven't seen the earlier posts on this subject but in case this point was not covered it is now possible for the policyholder to take 25% of the fund as a tax free cash sum when they take benefits out ~ of course all things being equal the fund and the pension will be smaller the earlier date the person chooses to take benefit.

Another caveat it is usually necessary for the pension provider to have updated their rules for individual to have the extra options of tax free cash etc.

cyclonebri1

suez_channel wrote: »

Is the opted out/serps fund the only way a fund can be protected rights?
Yes, that's right
I take it there is no benefit from this, ie, no "protection" other than that of the spouse as when taken this has to provide for him/her?
Yes, there is no specific "Life Assurance" incorporated in this.

The protected rights fund will be invested in a fund or funds of the insurance company or (a more general name) the "pension provider" - for example, a with-profits fund, a tracker fund, a managed fund or whatever you choose. The fund in the event of death before retirement is paid to legal spouse or other beneficiary/ies. When this type of contract first came out it meant the fund *had* to be used to provide a widow's or widower's pension but it can be paid as a capital amount.

I haven't seen the earlier posts on this subject but in case this point was not covered it is now possible for the policyholder to take 25% of the fund as a tax free cash sum when they take benefits out ~ of course all things being equal the fund and the pension will be smaller the earlier date the person chooses to take benefit.

Another caveat it is usually necessary for the pension provider to have updated their rules for individual to have the extra options of tax free cash etc.

A hearty thanks,:T

dunstonh

Now, now, I did say numptie question?

You asked a very simple question but didnt say what you wanted to know. You could write chapters on protected rights and still not cover what you wanted to know. Hence why I asked for specifics.


If the protected rights are linked to a guaranteed minimum pension (GMP) then the ability to have the 25% TFC is not guaranteed. Plus, if there is primary/enhanced protection in place prior to the rule changes in April 06 then the amounts available could be different as well.

If the contract is a section 32 buy out bond then you should be on guard for the above. If its a personal pension or a stakeholder pension then its not likely to be an issue.

cyclonebri1

Hi and thanks,

You asked a very simple question but didnt say what you wanted to know. You could write chapters on protected rights and still not cover what you wanted to know. Hence why I asked for specifics.


Ok, I think. Its just that the term protected rights sounds very specific as it suggests and probably means that it is an advantage over non protected rights? But I couldn't/can't see much advantage other than spouses rights, am I correct?

EdInvestor

The term "protected" really seems more to refer to a nanny-like prohibition by the Department of Work and Pensions which disallows people from investing this money (which emanates from NI rebates) in the normal way. (Reckless policyholders might lose it, you see.)

Until recently the DWP also used to direct exactly how it was to be used to provide a retirement income.Most of these prohibitions have now been removed, with the last of them scheduled to be dropped next October.The one relating to spousal annuities may still linger on.