Collective Retirement Account (CRA)

The CRA has been updated from a single account that can contain both uncrystallised and crystallised pension money, to a multiple, sub account model where uncrystallised and crystallised pension monies are held in separate sub accounts. This new structure allows:

• Separate asset allocations for uncrystallised and crystallised savings
• Flexi access drawdown and capped drawdown within the same client account.

This structure simplifies a client’s pension plans when they are consolidated. It allows their CRA to be tailored to their needs.

TOP TIP: Multiple flexi-access sub accounts can be merged – helping you simplify your client’s investments.

See more details on the new underlying structure.

The legal structure of the CRA remains the same and it continues to be an insured pension. Please view our guide on how money is protected.

New Account Numbers

When your clients move over to our upgraded technology, they will receive new account numbers.

See ‘Will my clients be given new account numbers?’ in our questions and answers section.

The new technology that supports the CRA allows for the following transactions to be undertaken to support greater client personalisation.

See a detailed product comparison of the CRA before and after the enhancements.

You can find further information on instructing withdrawals, including payment timescales in our money out leaflet.

Important information regarding how we safeguard regular income withdrawals and Tax Efficient Income Option (TRIO) payments can be found in our CRA Safeguards Guide.

Where possible we undertake pension transfers using the Origo Transfer Service. This service is an excellent way of ensuring transfers are completed promptly. Approximately 70% of the transfers we process are undertaken using the Origo Transfer Service.

Schemes that use ORIGO

We recognise that advisers want to do things as quickly as possible and the time it takes to process pension transfer can be frustrating. To help you, if a pension transfer can be processed by the Origo Transfer Service:

• you will not need to send us a signed Transferring Scheme Authority form. This will remove any postal delay.
• please keep this signed authority on your file as this may be required by us or Origo at a later stage.

A list of Origo Transfer Service customers is available here. As some Origo customers will not use the service for all the pension schemes that they operate it is best practice to contact the ceding pension scheme and they will be able to tell you if they use the Origo Transfer Service.

Schemes that do not use ORIGO

For those pension schemes that do not use the Origo Transfer Service:

• you will need to send to us a signed Transferring Scheme Authority form and any discharge paperwork required by the ceding scheme.

This is likely for smaller pension schemes (eg Small Self-Administered Schemes), older pension arrangements (eg Retirement Annuities) or more complicated pension schemes which involve some form of guarantee (eg final salary pension schemes). We will also need a signed Transferring Scheme Authority form if the transfer is part of a block transfer.

Transfers are now possible by the reregistration of assets. The industry standard for these transfers does not require P45 details to be provided as part of the transfer. This means that transferring a client in drawdown by reregistration could trigger an emergency tax code until HMRC update the client’s tax code. If you wish to avoid triggering an emergency tax code when transferring a client’s drawdown pension, you should consider requesting the transfer as a cash sum.

Please note, when you have begun a transfer by re-registration on the system, you will not see any activity on the CRA until all the fund re-registrations have been completed.

TRIO is a powerful way for your clients to potentially save thousands of pounds in tax and make their pension fund more sustainable. We have improved it even further so that more clients can now benefit:

• These payments can now be taken on any date from the 1^st to the 28^th of the month.
• They can now be taken monthly, quarterly, half-yearly and yearly.
• TRIO can now be set up to pay automated monthly payments from age 75.
• TRIO can now manage automated monthly benefit crystallisation events where the client has Primary, Enhanced, Fixed (2012, 2014, 2016), or Individual (2014, 2016) Protection and if the client has a Lifetime Allowance enhancement factor.

See a detailed product comparison of the CRA before and after the enhancements.

Faster Payment of Tax-Free Cash Possible

If the amount that is needed to be paid out as a tax-free lump sum is already held in cash within the uncrystallised sub account, there is no trading process required for the payment to be made. The client will receive their tax-free cash at least two days sooner than if an asset would need to have been sold.

Care needs to be taken on full crystallisation to ensure tax-free cash is paid on time

It is a good idea to ensure there is enough cash held in the uncrystallised sub account to pay the tax-free cash (and any lifetime allowance tax charges) before you instruct a full crystallisation. If you do the process will occur immediately and the customer will receive their payment faster.

If there is insufficient cash held to fund the tax-free cash payment, we will ask you to select assets to sell. The crystallisation will not occur until the trading process has completed. The trading process can take at least four days, during which time the value of the uncrystallised account can change. If there is insufficient cash to pay the tax-free cash at the point of the crystallisation the payment will fail. To negate this happening the value of assets to be sold is automatically increased by 10% to protect against a rise in asset values. However, where the assets to sell is small relative to the total value of the uncrystallised account, the crystallisation may still fail. To ensure tax-free cash is paid without delay we would advise you to do one of the following:

1. Ensure there is enough available cash when instructing a full crystallisation,
2. Select to fund the tax-free cash proportionately from the assets in the uncrystallised sub account,
3. Avoid relatively small assets sales in the crystallisation instruction

The 10% additional asset sale is not used for partial crystallisations and regular automated partial crystallisations via our Tax-efficient Regular Income Option (TRIO) as market movements will not cause a crystallisation to fail.

Care needs to be taken when targeting the crystallisation of precisely 100% of a client’s Lifetime Allowance.

If a tax-free lump sum is to be paid, the trading process can take at least four or more days to complete and during that time the value of the assets can change. The crystallisation will not occur until the trading process has completed. Therefore, if you are crystallising assets and targeting a precise amount to ensure a client does not exceed 100% of their Lifetime Allowance, it is prudent to avoid the situation where a change in asset value alters the amount that is being crystallised. To do this, you could choose to sell assets into cash before the crystallisation so that the amount crystallised is not potentially altered by asset value movements.

Care needs to be taken when crystallising and the sale instruction is from a specific asset

To pay out the tax-free lump sum, the proceeds from the specified asset being sold needs to be enough to meet the request. If it is not enough, then the payment of the tax-free cash will fail. This is likely to happen when the value of the specified asset is less than the tax-free sum being requested, or if there is a market movement in the asset value. When the specified assets are Exchange Traded Instruments, they can only be traded in whole units so their value is rounded down and any excess required to meet the tax-free sum requested will be taken from cash. If the cash value is insufficient the then the payment of the tax-free sum will fail.

TOP TIP: Withdrawals can be paid out even quicker if the amount is available in cash.