Can I transfer a Section 32 buyout policy

chelseablue

I have a pension from my previous job, on the annual statement it says it is a "Trustee Proposed Section 32 Buyout Policy"


It is with Aegon


I was only in the job a few years (2002-2005) and the value of the fund is currently £5,941.


I would like to transfer it to my pension pot with my current employer (pension is with Legal & General)


Can it be done?
Been looking online and the advice about these section 32 plans seems a bit confusing

dunstonh

Can it be done?

Yes.

However, there are potential issues.
1 - S32s are classified as occupational pensions. L&G or the administrator for the L&G plan may not allow transfers in without advice.
2 - If there is GMP and the cost of replacing the GMP is greater than £30k, then it will need an adviser.
3 - The S32 may be better than the L&G plan. Have you checked? (there may be greater than 25% TFC or GARs for example)

chelseablue

Thank you


I phoned Aegon at lunch time and they said about my plan having greater than 25% tax free cash.


Sorry Im not sure if my plan has GMP, it doesn't mention it on my last annual statement.


She said I will receive a document in the post shortly regarding transfer value.


I thought as its a relatively small pot it would be worth combining with my current provider

jamesd

It's worth thinking about it but section 32 is often used to protect valuable extra benefits that it's best not to give up by transferring. Like that higher tax free lump sum. The guaranteed minimum pension is one possible benefit. Need to ask and be sure about those before transferring because they are likely to be a good enough reason to leave it where it is.

I did refuse to have a work pension moved to section 32 because all I had were standard benefits but section 32 is normally a big red flag for check carefully for losing valuable benefits before doing anything.

xylophone

https://www.aegon.co.uk/support/faq/Understanding-our-products/retirement-products/workplace-pensions/what-is-Trustee-proposed-Section-32-Buyout-plan-TPS32.html

The Scheme was winding up?

Scheme membership 2002-05 would not have carried a GMP - this related to benefits accrued 1978-1997.

However, for post 1997 rights transferred to a S32 this note http://www.pruadviser.co.uk/content/nav/about/26674/pghome/49880/53732/53816/53822/53825/


from the Pru says

"There is no requirement to guarantee contracted-out benefits for the post 6 April 1997 portion of the transfer value to a S32 plan. However, any pension for the post 6 April 1997 part of the transfer value must be used to provide pension that increases each year in payment by the lower of 5% and the increase in the RPI for that year. This applies whether or not the scheme service was contracted-out post 6 April 1997."

A S32 can also protect a right to a greater than 25% PCLS when the pension is taken.

http://www.metlife.co.uk/uk/Documents/Technical_Library/0744_Scheme-specific_lump_sum_protection.pdf

Before considering a transfer, the OP should ask Aegon to clarify what benefits are available under the policy - whether the revaluation is still RPI or has become CPI and what the protected PCLS is.