The following Pensions practice note provides comprehensive and up to date legal information covering:
This Practice Note focuses on the considerations that were applicable before 6 April 2016, the date on which contracting-out on a salary-related basis (also known as DB contracting-out) was abolished, when 'buying out' the following contracted-out salary-related (COSR) rights:
guaranteed minimum pensions (GMPs)—these are the benefits accrued by members of COSR schemes as a consequence of contracting out between 6 April 1978 and 5 April 1997
Section 9(2B) rights (also known as post-1997 COSR rights)—these are the benefits accrued by members of COSR schemes as a consequence of contracting out between 6 April 1997 and 5 April 2016
The legislative requirements applicable differed depending on whether the contracted-out rights in question were GMPs or Section 9(2B) rights.
For information on the buy-out considerations applicable from 6 April 2016 in respect of Section 9(2B) rights and GMPs, see Practice Note: Buying out Section 9(2B) rights and GMPs from 6 April 2016.
For information on buy-out issues generally, see Practice Note: De-risking—pension buy-outs and buy-ins.
For information on the abolition of DB contracting-out on 6 April 2016, see Practice Note: Abolition of DB contracting-out—an introduction.
A pension buy-out exercise involves the trustees of a defined benefit scheme agreeing with an insurance company that, in exchange for a payment or series of payments, the insurance company will issue individual insurance (annuity) policies to the scheme members whose benefits
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