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3.13.4 Transfer to a S.32 Buy Out Policy or to a Personal Pension
Policy
- Policy belongs to the individual, who can choose the investment
medium (within the normal guidelines) for the funds.
- Loss of guaranteed benefits (other than GMP or requisite benefits
if S.32).
- Loss of guaranteed or discretionary increases.
- Loss of possibility of sharing in future surplus.
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- Features of the S.32 Contract:-
- The maturity date of the S.32 must be the same as the normal retirement
date under the ceding pension scheme - but provision may be made
for early and late retirement, with appropriate adjustments to benefits.
- Lump sum death benefits may be written under trust for inheritance
tax planning purposes.
- Any relevant benefits may be provided (within approvable limits)
whether or not the benefits were provided for in the rules of the
original scheme. For example, an escalating pension could be provided
in place of a level pension.
- The value of the benefits may be transferred subsequently to another
approved pension scheme, apart from any portion which secures either
the GMP or requisite benefits and these must be retained within
the S.32 - it is only the remainder of the value which may be transferred.
- Protected rights benefits accrued as a member of a contracted-out
money purchase scheme or a personal pension scheme may not be bought
out.
- S.32 contracts cannot be assigned.
- Availability of open market option.
- Transfer values may be split between different policies, but the
benefits must all be taken at the same time.
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- PPs can accept transfers of FSAVCs whereas S.32 contracts cannot.
- Where the transfer value is split, the benefits can be taken at
different times under each policy, which is not possible under a
S.32 contract.
- PPs can accept transfers which include protected rights, whereas
S.32 contracts cannot
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