PSI13.4.5 - Withdrawal from Service: Deferred Benefits under Individual Policies (Buy-Out Policies) - Required Provisions

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

[PN10.39]

With effect from 1 July 1994, the primary requirement of an acceptable buy-out contract is that it must provide only those relevant benefits as defined in section 612 (1) ICTA 1988, which could be provided directly by a hypothetical approved scheme, in other words, the benefits must be approvable in form and amount. To be approvable in form, the benefits must fall within our published criteria for approval of a scheme under Chapter 1 Part XIV ICTA 1988. To be approvable in amount, the benefits must be within the limits permissible under the particular regime appropriate to the member concerned (ie whether the member has pre-17 March 1987 continued rights, pre-1 June 1989 continued rights or is subject to the Finance Act 1989 requirements). In addition the contract should be made with the administrator of an approved scheme, or a scheme being considered for approval, or a relevant statutory scheme either alone or together with the individual to whom the benefits relate. It should be a single premium contract with no provision for the payment of further premiums.

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