This step-by-step summary explains how to manage setting up your client’s pension benefits to take a tax-free lump sum and income. This can be a full or partial withdrawal.
What you’ll need to get started
- Your client’s bank details (if not previously added to the system).
- Details of the annuity purchase age.
- Details of the desired tax-free lump sum per payment, payment frequency, and first withdrawal date.
- Lifetime allowance (LTA) percentage used. This is the total LTA used with any other pension scheme, plus the LTA used in any other pension accounts your client holds with us (including any pensions held on the platform under a different account number to this or any pensions held with Old Mutual Life Assurance Limited).
- Details of the assets to be sold to fund the payment(s).
- Details of any taxable income.
Setting up taking benefits as a tax free lump sum and income
① From the homepage, search for the relevant client.
② From the client’s dashboard select the relevant uncrystallised Collective Retirement Account.
③ Click on the ‘Money out’ quick link button at the top of the screen and select ‘Take Pension benefits’.
④ Complete the questions relating to the advice that’s been given.
- You’ll need to confirm that your client does not have a pre-A-day pension, drawdown or annuity that started before 6 April 2006 that you have not informed us about previously.
- If your client has any form of pension protection which they are using for this withdrawal then you will need to complete the ‘Pension protection’ section.
- Select the withdrawal type as ‘Tax free lump sum and income’ from the dropdown menu and update the annuity purchase age (this must be 10 years older than their current age, up to a maximum age of 99).
- Select the ‘Crystallisation’ option, full or partial, and enter the crystallisation amount if partial is required.
- Enter any lifetime allowance percentage used outside of this arrangement. This will then generate the ‘Total lifetime allowance previously used on this account’ percentage.
- Add an ongoing adviser fee, if you are taking one. If previous Benefit Crystallisation Event has occurred, this will be greyed out and the fee will automatically be prepopulated
- Choose assets to sell to pay the tax free lump sum and any charges, and to move to the crystallised account. This can be either proportionally across all assets or from specified assets. Please note that if there is insufficient value in an asset at the time of the sale then we will default to selling the remaining assets proportionally.
- Click ‘Next’.
⑤ On the next screen, enter whether taxable income is required and the gross income amount per withdrawal. If your client does not take the maximum amount of income available per payment, the residual amount will be moved to their crystallised account. When your client takes a flexi-access income payment for the first time, there will be a reduction in the amount they can pay into money purchase pensions, known as the Money Purchase Annual Allowance (MPAA). This is currently £4,000 each tax year.
- Select the frequency from the dropdown menu and enter the first withdrawal date. This can be any date between the 1st and the 28th and must be at least ten working days from the current date.
- Next, choose where to disinvest from to meet the income payments. This can be either proportionally across all assets or from specified assets.
- Use the dropdown menu to select the client’s bank details. If required, you have the option to split the payment over two accounts.
- Click ‘Next’.
⑥ The next screen allows you to review the information you have entered.
- Use the ‘Edit’ options to make any amendments.
- Review the information, tick the declaration and click ‘Submit’.
- You can view the progress of the instruction within the ‘Activities’ tab from the client’s account dashboard.
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