PSI24.1.11 - Pension Credit Benefits – Buy-out Contracts

(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)

Where a buy-out policy is subject to a pension sharing on divorce order (see PSI3.5.4), the ex- spouse’s pension credit rights may be transferred to another pension arrangement pension arrangement in accordance with normal requirements, such as to a

• new buy-out contract taken out to especially house the pension credit benefit, or
• another scheme where the ex-spouse is already an employee member, or
• personal pension scheme.

The pension credit benefit cannot be held within the existing buy-out from contract from which the pension credit derived.

If the pension credit is transferred to a new buy-out contract, the new contract must satisfy the requirements set out in PSI Part 13, Section 4 except in respect of the payable benefits. The form of and the limitations on the benefits that can be paid to the ex-spouse from the new buy-out contract must meet the requirements set out in PSI Part 24.