Section 32 Policy (Buy Out Policy)

A Section 32 Buy Out Policy is similar to a personal pension plan. However, unlike a personal pension plan you may not contribute a regular monthly premium into the plan.

Section 32 Contracts only allow single "one off" transfers and have the same Inland Revenue rules as an occupational pension scheme.

The key thing is that you have individual control like a personal plan. Transferring company benefits to a Section 32 Buy Out Policy gives the individual more control over his/her pension benefits but with some of the guarantees you may have had within your company scheme.

These policies were introduced in 1981 and where the scheme member is transferring guaranteed minimum pension rights from a contracted out scheme the revalued rights will be provided at the state pensionable age.

Last Updated: January 2006 © Moneyextra.com

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