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Your pension phased drawdown service

We’ve introduced the ability to set up automated regular crystallisations. These new improvements have enhanced our existing drawdown functionality, which also enables your client to take one-off crystallisations and PCLS (tax-free cash) along with regular and one-off taxable income.

The new automated service allows you to set up regular crystallisations, providing your clients with a regular PCLS (tax-free cash) payment without the need to submit an instruction each time.

To meet your clients’ needs and provide flexibility, we offer a choice of crystallisation frequencies: monthly, quarterly, half yearly and yearly, as well as two payment dates; either the 10th or 25th of the month.

Benefits for you

  • Ability to implement tax-efficient income/withdrawals for your clients in a more efficient manner.
  • Reduces the cost to your business as regular crystallisation instructions only need to be set up once rather than having to instruct each time.
  • Allows you to meet clients’ changing needs as regular instructions can be easily amended online.
  • Ability to track the status of the instruction online.

How we crystallise assets and pay out PCLS

Money is always moved from the Pension Savings Account to the Drawdown Account first. To do this, any money in the Pension Cash Account will be used first. If there is insufficient cash, then assets will be moved proportionately from the Pension Savings Account.

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Once the assets have been moved to the Drawdown Account, payment of the PCLS will then be made. For regular PCLS, this is taken from cash first, but where there is insufficient cash, our default is to take the shortfall by disinvesting proportionately from all assets in the drawdown account, or you have the option to select the largest fund. A 2% oversell will be made to allow for market movements/brokerage.

In the tables below you can see how to submit instructions for different scenarios.

Scenario 1

Scenario: Client wants to start taking a regular PCLS only.

Key points to note:

  • Regular PCLS required.
  • Taxable income not required.
  • Client has an existing Pension Savings Account.
  • Client does not have money in an existing Drawdown Account.

Submission:

  • Single submission via the new screens.  
  • Quote & submission possible within the new journey.

Instruction tracking available?

  • Yes, online via Instruction Tracking.

Scenario 2

Scenario: Client wants to start taking a regular PCLS and taxable income.

Key points to note:

  • Regular PCLS required.
  • Taxable income required.
  • Client has an existing Pension Savings Account.
  • Client has money in an existing Drawdown Account.

Submission:

  • Two submissions - one to set up the regular crystallisation (including regular payment of PCLS) and a separate instruction to set up the regular income. It's not possible to combine PCLS and income within a single illustration.
  • Regular income can be set up immediately providing there are sufficient assets available in the drawdown account to cover the first income payment.

Instruction tracking available?

  • For the regular crystallisation/PCLS payment - online tracking available via Instruction tracking.
  • No instruction tracking for the regular income.

Scenario 3

Scenario: Client wants to start taking a regular PCLS and taxable income.

Key points to note:

  • Regular PCLS required.
  • Taxable income required.
  • Client has an existing Pension Savings Account.
  • Client does not have money in an existing Drawdown Account.

Submission:

Income required is between 0% - 90% of the maximum available.

  • Two submissions - one to set up the regular crystallisation (including regular payment of PCLS) and a separate instruction to set up the regular income. It's not possible to combine PCLS and income within a single illustration.
  • Regular income can only be instructed and set up 11 working days prior to the payment date, i.e. when sufficient assets are available in the Drawdown Account.

Income required is 90% - 100% of the maximum available.

We can only pay out this level of income where there are assets in the Drawdown Account equivalent to at least 10% of one taxable income payment or there are 12 months’ worth of crystallisations in the pension savings cash account.

In order to create a residual value, you will be required to submit a one-off crystallisation for month one based on a higher amount than usually required but keeping the income level the same.

Instruction tracking available?

  • For the regular income - no online tracking.
  • For the regular crystallisation, instruction tracking available via Instruction tracking.

Scenario 4

Scenario: Instruct a transfer from an external provider and set up a regular crystallisation/PCLS/income.

Key points to note:

  • Regular PCLS required.
  • Taxable income may or may not be required.
  • Client does not have an existing Pension Savings Account.
  • Client does not have money in an existing Drawdown Account.

Submission:

Two/three submissions:

  • One to set up the transfer including an immediate crystallisation, PCLS and income for month one and;
  • A separate submission to set up a regular crystallisation from month two onwards.
  • Two separate quotes will be produced. Illustrations for the transfer, regular crystallisation and any taxable income will all be separate.

Regular crystallisation can only be set up once the transfer has been received.

Instruction tracking available?

  • For the transfer to immediate drawdown and one-off crystallisation/PCLS/income payment - no online tracking available.
  • For the regular crystallisation, instruction tracking available via Instruction tracking.

Bank mandates

With the new service, it’s important to set up the bank account online if one hasn’t been set up already. You can do this at any time, which allows us to verify the account in good time to meet any payments. This should be done on the client summary screen prior to setting up a regular crystallisation.

Please note a bank account cannot be set up within the regular crystallisation journey.

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