Pensions

Department for Work and Pensions written question – answered at on 31 October 2022.

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Photo of Stephen Timms Stephen Timms Chair, Work and Pensions Committee, Chair, Work and Pensions Committee

To ask the Secretary of State for Work and Pensions, in what circumstances a man's pension that is subject to a Section 32 buyout policy will not pay out until the age of 65; and for what reasons there are restrictions on pensions subject to a buyout policy.

Photo of Laura Trott Laura Trott The Parliamentary Under-Secretary of State for Work and Pensions

A Section 32 buy-out policy is an individual contract between an individual and usually an insurance company, purchased using funds transferred from an occupational pension scheme.

Such a contract can and may pay out before the age of 65 for a man. However, a Section 32 policy may contain a Guaranteed Minimum Pension (GMP), and where it does, it must, as a minimum, pay a GMP from age 65 for a man or 60 for a woman, regardless of investment performance. Where there are insufficient funds to pay additional benefits, a Section 32 policy may therefore pay out only the GMP from these ages. This is a valuable guarantee, as it means that a person’s retirement income cannot decline below the amount of the GMP.

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