Legacy Occupational Schemes Flashcards
What is a ‘Section 32 Buy-out Bond’?
An occupational pension scheme that has been transfered to a personal pension
When moved to a personal pension the insurance company who accepted the transfer had to then pay the GMP (Benefits that continue to escelate).
So they put the benefits into a section 32 plan to secure this.
Can still draw upto 25% PCLS. (Tax free cash)
Which of the following pension types must continue to ensure that any Guaranteed Minimum Pension (GMP) benefits escalate in line with statutory minimums?
A. A Self-Invested Personal Pension.
B. A Section 32 buy out bond.
C. A Stakeholder pension plan.
D. A Personal Pension Plan
B. A Section 32 buy out bond.
A Section 32 buy out bond is specifically used to continue to provide GMP benefits. The insurance company that accepted the transfer needs to ensure this is maintained
What is an ‘Executive Pension Plan’?
Used to provide benefits to directors and key employees.
Provided a lot of flexibility.
Each member determined their contribution and benefits.
Could have differential in employer contributions per employee.
What is ‘PCLS’?
PCLS, which is often known as ‘tax free cash’ or a ‘tax free lump sum’, is a tax free payment which most people can receive when they start accessing their pension benefits. It is normally 25% of the value of the pension benefits being accessed.
