Advantages of Buy Out Bonds:

A pension Buy Out Bond is a product into which you can transfer money that you have saved in a group pension scheme, commonly used when changing employer. It is essentially a portable pension pot that the individual owns and has complete control over.
Rising sales of the product are generally perceived as a gloomy economic indicator, since they were traditionally associated with people who had recently lost their jobs. But a trend is now emerging, with demand coming from people who have kept their jobs but seen their company pension scheme wound up. Many defined benefit (DB) pensions, where employers guarantee a fixed sum for employees upon retirement regardless of the performance of their investments, are grossly underfunded – prompting people to opt out, or for the schemes to close.
Sales of ‘Buy Out Bonds’ are increasing as companies wind up failed defined benefit pension schemes, according to pensions experts Standard Life. Sales have grown by 50 per cent between 2007 and 2013. Overall new pensions business, by comparison, is down 44 per cent in the same period.
According to Standard Life, there are approximately 1,000 DB schemes in existence and they think it’s realistic to expect around half, especially those that are deeply insolvent, to wind up over the next four to five years.
A little known but attractive feature is the ability to access a Buy Out Bond at 50 years of age; most pensions have higher age limits governing access. You can consolidate your pension benefits from various jobs you may have had into a Buy Out Bond which you own and control. As you own the Buy Out bond you can choose how to invest your funds and when you can draw on it. You decide when you want to take your retirement benefits (from age 50 years on) as you now have the buy out bond in your own name; it eliminates the need to go back to the Trustee of the Scheme to get their signatures.
If you die before drawing on the Buy Out Bond, the value of the funds at that stage will be paid to your estate, for the benefit of your next of kin.
How can I access the funds from my Buy Out Bond?
Depending on the type of pension scheme from which the transfer value paid into the Bond came from you will have a number of options when it comes to taking your retirement benefits.
You may be able to take part of the fund as a lump sum
You may be able to use the balance to buy an annuity or you may be able to transfer the balance to a mix of an Approved Retirement Fund (ARF) or Approved Minimum Retirement Fund (AMRF). (This depends on the rules of the pension scheme where the transfer came from.

Remember: You can draw on your Buy Out Bond from age 50 onward. If you become seriously ill before age 50, you may be able to draw on your Buy Out Bond immediately.