What Is A Section 32 Buy Out Policy?

Can You Take Advantage Of A Section 32 Buy Out Policy?

A Section 32 Buy Out policy allows people to transfer the funds and benefits of their company pension scheme into a private fund. The scheme allows you to take advantage of the same range of benefits as your original scheme, whilst having the same individual control as a personal pension plan (PPP).

The Section 32 Buy Out policy differs from a PPP in that you cannot continue to make monthly contributions to the scheme once you have transferred your company benefits to it. You are only allowed a single transfer, which is why it is ideal for pension transfers from frozen or existing company pension schemes.

In order to transfer your company pension into a Section 32 buy out scheme, you will need to request a full transfer value on your current scheme. You can ask your pension scheme trustees to provide this for you, or you can speak to an independent pensions adviser, who will be able to request a transfer value on your behalf.

What Are The Benefits Of A Section 32 Buy Out Policy?

The benefits of a Section 32 buy out policy are that, unlike setting up a new personal pension plan, you will be able to receive the enhanced benefits that come with a company pension scheme, together with the flexibility of wide fund management opportunities. Company policies are typically restricted to a certain number of funds, whereas personal pension plans have more choice.

Are There Any Drawbacks To A Section 32 Buy Out Policy?

Once you have transferred your funds into a new policy through the Section 32 buy out policy, you won't be able to pay in any additional funds. If you want to continue making payments into a pension plan, you will need to take advantage of the scheme offered by your new employer, or set up a personal pension plan.

How Can i Find Out More?

To find out more about the Section 32 buy out policy and how to transfer the funds from your company pension scheme into a new policy, you should talk to an independent pension adviser. Pensions legislation is complex and advisers have the market knowledge and experience to advise you on the best way to handle your transfer. Independent pensions advisers are regulated by the Financial Services Authority, which means that they have to give you clear, understandable advice, a cooling-off period after you have made your decision, and set out all your options in writing.