Section 32 / Buyout Policy

Many clients seeking pension advice will produce a well warn policy document and say they have no idea what this Buy Out policy is all about.

Many years ago if you transferred out of an occupational scheme, particularly a scheme which was contracted out of State Earnings Related Scheme (SERPS) or  State Second Pension, you would be given your own policy which mirrored the rules of the scheme which you had left. Although it mirrored the rules it did not provide any guarantee of benefits so in most cases the eventual benefits depend on investment performance.

However, if the scheme was contracted out you may be guaranteed a Guaranteed Minimum Pension (GMP) at State Retirement Age. That benefit is guaranteed and in most cases will not be available until State Retirement Age.

If you have such a policy you will need to seek advice as it is complex and if you take benefits early you tend to lose out. Nicholls Stevens can give you this advice.