Section 32 Buy Out Bond - Company Pension Transfer

What is a Section 32 Buy Out Bond/Policy

A Section 32 Buy Out Bond is a policy typically used as a home for your share of a pension from a company pension scheme. A Section 32 policy is similar to a personal pension in that the money is your own personal pot of money, away from your employer's scheme but allows you to maintain some of the same Inland Revenue rules as your company pension. This is of particular benefit where you may have had additional benefits in your old pension scheme that are not available had you have moved your money to a personal pension. Any guarantees such as X% of income at a certain rate at retirement offered under the employer scheme are provided by the Section 32 provider.

Section 32 an option on wind up
Section 32 Buy Outs are often a default arrangement when a pension scheme is winding up. This is because your employer's scheme for various reasons (see scheme wind ups), may not want to continue administering an employer pension but can't just transfer youinto a personal pension as this could potentially disadvantage you.

Mirrors the company pension's benefits
A Section 32 is basically mirrors an occupational scheme and the maximum limits imposed on income and tax free cash entitlement as well as how they are calculated. Many people benefit from this additional flexibility, for example, tax free cash is often an important consideration when you plan for your retirement. However you may find there is a significant cost associated in mirroring some of the main scheme benefits, such as guarantees of X% on a set date and a personal pension may be more suitable.