Transact Section 32 Buy Out Bond explained

A Section 32 buy out bond is a pension plan that holds benefits transferred out of an occupational pension scheme, usually a final salary or company scheme you have left behind. The Transact version does the same job: it lets you transfer in benefits from an occupational scheme or from another Section 32 buy out bond¹. It is a registered pension scheme registered with HMRC, so the usual pension tax rules apply to the money inside it².

It is not a savings account and it is not a way to pay in new money. The Transact Section 32 Buy Out Bond can only accept transfer payments, not contributions, and the minimum transfer payment it accepts is £1,000¹. You must also keep a minimum cash balance equal to 2% of the value of the bond¹. If you want to add fresh money each month or year, that needs a different arrangement.

The bond is run by Transact, the trading name of IntegraLife UK Limited, which is authorised by the Financial Conduct Authority and appears on the Bank of England's list of UK insurers authorised to carry out contracts of insurance³. The provider's own site carries today's charges and the current figures, so this page explains how the charges are worked out rather than what they are.

What it is and who it is for

A Section 32 buy out bond exists because of a specific piece of pension history. When someone left a company pension scheme, particularly a final salary scheme, the scheme could offer to transfer the value of their benefits into a personal policy instead. The Transact Section 32 Buy Out Bond is a modern version of that policy: a pension plan that lets you transfer in benefits from an occupational pension scheme or from another Section 32 buy out bond¹.

It tends to suit someone who already holds benefits in an old occupational scheme and wants them in a plan they can invest themselves, through a financial adviser. It is not designed for someone starting a pension from scratch, because no contributions can be paid in¹. It is also not a Stakeholder pension, and the key features document states that no Stakeholder pensions are offered¹.

There is one important limit on what can be moved in. The bond cannot accept transfers that contain Guaranteed Minimum Pensions¹. A GMP is a minimum income an old scheme must provide, and it cannot be transferred into this policy. If your old scheme includes one, that part of your benefits stays where it is or needs separate handling, and it is worth checking before you commit to anything.

Because the bond is a registered pension scheme, the tax treatment follows the normal pension rules rather than anything specific to this product². That means no income tax is payable on investments held in the bond, and benefits are taxed when they are paid out¹.

How it works

Money in the bond is invested across a wide range of assets. The key features document lists open ended investment companies (OEICs), unit trusts, investment trusts, exchange traded funds, structured products, stocks and shares, venture capital trusts, government securities and term deposits¹. You choose investments through a financial adviser, and the value of the bond rises and falls with them.

The bond is a registered pension scheme, and the cash balance within it is beneficially owned by the provider at all times, not by you or anyone else entitled to benefit from the policy². That matters if the provider fails, and it is covered in the protection section below.

When you take benefits, the mechanics are set out in the policy terms. You must give at least one month's notice in writing of the option or options you have chosen². Normally the maximum pension commencement lump sum is 25% of the value of the part of the fund being used to provide those benefits, and for UFPLS payments 25% of the lump sum is tax-free with the rest subject to income tax².

There are rules on the income options too. Capped drawdown is a closed option: you cannot designate any part of your fund for capped drawdown if no part of it was designated before 5 April 2015². Where capped drawdown applies, the maximum limit is reviewed at least every three years until the end of the review year in which you reach age 75, then every year from age 75, and you can elect a review date by giving five days' notice².

If you want to move the bond elsewhere, the policy terms require the provider to receive any transfer request at least 30 days before the date the transfer value is to be paid².

How the fees and charges work

Charges on the Transact Section 32 Buy Out Bond are not a single figure. They come in layers, and the provider's charges schedule and terms set out how each layer is calculated. The provider's site has today's figures.

The first layer is the wrapper charge. The charges schedule lists a quarterly fee of £20 for the Section 32 Buy-Out Bond Wrapper⁵. That is a flat platform charge for holding the bond, separate from anything you pay for advice or for the underlying investments.

The second layer is the annual charge, which is worked out as a percentage. The terms state that the percentage stated for Annual Charge (Cash) in the Transact Annual Charge Table is multiplied by the average value of cash balances, and the equivalent applies to investments, over each month, deducted at the end of each month and pro-rated by days⁶. In other words, it is charged monthly on the average value held, not on a fixed date.

There is a further point that affects the rate. For any period during which you do not have an adviser appointed, the percentage multipliers for the annual charge are increased, per the charges schedule⁶. So the cost of the wrapper depends partly on whether an adviser is in place.

The provider can also increase administration charges. The terms state it reserves the right to increase administration charges for all Transact Wrappers from 1 January each year, limited to the percentage rise in the Average Weekly Earnings Index or the Retail Price Index over the 12 months ending 30 September of the previous year⁶. If it introduces a charge for posted paper correspondence, it must give no less than thirty days' written notice⁶.

Finally, there are the investment costs themselves. Trading fees are incurred when you buy and sell a bond, but there are no annual management charges on individual bonds⁷. Those trading costs sit alongside the platform charges rather than replacing them.

Who can apply and how to apply

The Transact Section 32 Buy Out Bond is not bought directly off a shelf. The policy terms state that your financial adviser must be authorised in the UK to provide pensions investment advice, and one with whom the provider has an arrangement². In practice that means the route in is through an adviser, not by filling in a form on the provider's website.

The eligibility rules are narrow:

• The bond can only accept transfer payments, not contributions¹.
• The minimum transfer payment is £1,000¹.
• You must maintain a minimum cash balance equal to 2% of the value of the bond¹.
• It cannot accept transfers that contain Guaranteed Minimum Pensions¹.

Before you commit, it is worth understanding what a transfer out of an occupational scheme involves. If the scheme is a final salary or defined benefit scheme, transferring is a significant decision with its own rules and risks, and there is a separate page on transferring out of a final salary pension. There is also a rule about when advice is required for a transfer, covered on when advice is required to transfer.

Once the bond is open, there is a cooling-off period. You have 30 days from the day you receive the confirmation letter to change your mind and cancel when opening the bond, and 30 days when you first take income¹. The policy terms also give a right to cancel within thirty days of receiving notification that the policy has commenced or the transfer has completed, by writing to the provider².

If you are comparing where to hold transferred benefits, the wider options are set out in personal pensions explained and SIPPs explained, and the Transact brand page is at Transact.

How your money is protected

The bond is a registered pension scheme registered with HMRC². That is the first layer of protection: it means the money is held within the pension tax framework, and the provider must operate it under pension rules.

The second layer is compensation if the provider fails. The key features document states that the Financial Services Compensation Scheme will provide cover for at least 100% of the value of the bond if IntegraLife UK Limited becomes insolvent¹. That is a higher level of protection than the standard deposit limit, because this is a pension policy rather than a bank account. For comparison, the general limits and how they differ are set out on PPF vs FSCS protection.

There is a limit to that protection, and it concerns cash held within the bond. The policy terms state that if an approved bank which holds any or all of the cash in the cash balance fails, and the value of the cash balance falls, the provider will not be liable to you for any reduction in the value of the fund or the policy². So the FSCS cover for the provider's insolvency does not extend to losses caused by a bank holding the bond's cash failing.

Cash held with Transact more generally is grouped with other clients' money in accounts with a range of UK banks, safeguarded under the FCA's Client Asset (CASS) rules and held separately from the firm's own cash⁷. The client money guide gives a worked example of how FSCS protection applies across those banks: on an example of £650,000 held in cash in a general investment account, the total notional FSCS protection across the listed banks is £636,500⁷. That example is for a general investment account rather than this bond, but it shows how the protection is spread.

Problems, complaints and getting help

If something goes wrong, the first step is to complain in writing to the provider. The policy terms state that a formal complaints procedure is available on request, and that if the provider cannot settle your complaint to your satisfaction, you can refer it to the Financial Ombudsman Service². The key features document confirms the same route: if the complaint is not dealt with to your satisfaction, you can refer the matter to the Financial Ombudsman Service¹.

The Financial Ombudsman Service publishes complaints data by product. In the first quarter of 2026/27 it recorded 21 complaints opened about with-profits bonds and 20 new complaints about offshore bonds in the previous quarter⁸. Those figures are for other bond types rather than Section 32 buy out bonds specifically, but they show the kind of volumes the ombudsman sees in this area.

There are other places to get free help. If your complaint is about the pension itself rather than the provider's service, the Pensions Ombudsman handles pension complaints, and the process is set out on the Pensions Ombudsman and complaining about a pension. For general guidance on your options, Pension Wise offers free, impartial guidance, covered on Pension Wise: free guidance on your pension options. If you are worried about a transfer being mis-sold or about a scam approach, there is help on pension scams: warning signs, transfers and getting help.

One thing to watch for is the forfeiture rule. The policy terms say a benefit may be forfeited if you fail to claim it within six years of the date payment becomes due, or if you try to assign or surrender a benefit or enter a transaction not allowed under the policy or UK law². Where a benefit is forfeited, the part of the fund representing the amount forfeited is retained to offset general administration expenses, or may be applied to provide other benefits permitted by the policy². If you are entitled to a benefit, claiming it matters.