If your pension holds enough funds to honour all the rules of the pension when it was initially transferred out, then you can transfer your section 32 pension out to a different pension and provider.
If it doesn’t hold enough funds, which you can no longer add to then transferring a section 32 pension becomes more difficult. It all depends on the specific details and guarantees of your section pension.
What could impede a section 32 pension transfer?
A section 32 pension, which is also known as an s32 buyout policy or section 32 buyout bond, accepts transfers from occupational pension schemes. They were more popular in the late 1980s, before personal pensions. But prior to that many companies and pension holders used them to transfer their company pension out to a type of deferred annuity. Some of the section 32 pensions had two elements and some had one.
Those with two elements include a Guaranteed Minimum Pension (GMP) which provide the holder with a guarantee that the GMP will be paid during retirement. That is regardless of how much money is held in the fund.
For those section 32 buyout pensions that have it, the GMP element is linked to the fact that the company pension in question used to be part of the old second-tier state pensions. Some companies elected to contract that second tier part of an employees state pension and put it into their company pension, or State Earnings Related Pension Scheme (SERPS).
Where a company had contracted out some of their employees’ state pensions into the company pension plan, there was a guaranteed minimum pension when they retired as part of it. However, businesses and providers who transferred management of that pension to a different provider or scheme, had to include the GMP as part of the agreement.
That means, if your section 32 pension still doesn’t have enough funds to cover the SERPS-linked GMP, then your current provider may not permit a transfer because you must still receive the guaranteed pension amount and they cannot pass a pension with a shortfall onto a different provider.
Circumstances that allow a section 32 pension transfer
For those whose s32 buyout bond has the two elements including the GMP and sufficient funds to cover the GMP element of your pension terms, then you can transfer your section 32 pension to other providers and pensions.
If your section 32 pension doesn’t have the guaranteed element in it, it could also be known as an excess pension benefit. As such, there are no limits relating to guaranteed minimum pension when you retire and you are also able to transfer your section 32 pension.
Where can I transfer my section 32 buyout bond to?
With the wider variety of pensions now available, it’s possible to transfer your section 32 pension to a number of different providers and personal/private pensions types. Self invested Personal Pensions (SIPPS) and personal pension plans are among the options you will have.
Not all providers and pension types accept pension transfers in from other schemes, but many do. However, you must check the details of the personal pension you wish to transfer into to ensure it’s compatible with the transfer you want and that you won’t lose too many of the benefits and guarantees that are part of your existing s32 buyout bond.
How do I transfer a section 32 buyout pension?
How you transfer a section 32 pension can depend on the rules of your existing s32 buyout bond and also the pension you want to transfer it into.
In some cases, you will be able to do it yourself by following the steps below…
* Gather all the details of your section 32 pension
* Confirming the fund amount and if it is enough to satisfy the benefits attached to it
* If your section 32 pension holds more than £30,000 you must speak with a pensions adviser, in line with government rules on pension transfers
* Once you have found the pension you wish to transfer your s32 buyout fund into, confirm the rules relating to that new pension
* Once you have all the required information complete the paperwork to make the transfer, give your final signature and your section 32 pension will be transferred into your newly selected pension