This article has not been updated with the Lifetime Allowance Abolition changes that came into effect from 6 April 2024.
Nine flexible withdrawal options
The Collective Retirement Account (CRA) delivers all the options below at no additional cost. This gives your clients the methods of withdrawal you need to help when they wish to access their pension savings.
Tax efficiency with withdrawal flexibility
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Option
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Detail
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Open market option
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Option to purchase a lifetime annuity for a guaranteed income for life.
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Flexi Access Drawdown
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From age 55 (changing to age 57 from 6 April 2028), no restriction on the amount of income that can be withdrawn. Withdrawals will trigger the money purchase annual allowance (MPAA).
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Lump sums
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Normally up to 25% can be withdrawn as a tax-free lump sum.
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Capped Drawdown
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Existing pre-April 2015 drawdown contracts only. Removes the need to enter flexi access drawdown. No money purchase annual allowance (MPAA) trigger.
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Small Pots
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Up to £25,500 ad hoc net withdrawal. Emergency income tax avoided. No money purchase annual allowance (MPAA) trigger. Need some available lifetime allowance. Not suitable for clients who have registered for Enhanced Protection or Fixed Protection 12, 14 or 16 granted on or after 15 March 2023 or clients who have a protected tax-free cash lump sum or protected early retirement age. |
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Beneficiary Drawdown
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Full flexibility available for pension death benefits with dependants, nominees and successors all able to access beneficiary drawdown.
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TRIO: Pension commencement lump sum only
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Tax-efficient regular income options (TRIO). All three are automated regular payment options for efficient
set up and management. For clients who want to receive a
regular payment but also wish to continue to grow their pension
commencement lump sum entitlement. Income tax can be
saved and less could be in your client’s estate for inheritance tax
purposes. Need some available lifetime allowance.
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TRIO: Pension commencement lump sum plus full income
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TRIO: Pension commencement lump sum plus some income
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Some people think a pension is all about how much you can take out as a lump sum. It’s not. It’s about how much you can take out as an income and keep going.
Anonymous adviser
What are the benefits of TRIO?
TRIO can make your client’s pension fund last longer as it allows your clients to take tax-free cash on a regular basis to provide a source of retirement income with no income tax liability. This means:
- The policy is worth more as more remains invested over the long term
- As less has had to be withdrawn, less income tax has been paid
- More remains in the pension, the most IHT friendly asset of all
Each of our three options provide automated regular payments, which can help you reduce unnecessary regular withdrawal paperwork.
The tax treatment and efficiency of these options will depend on the individual circumstances of each of your clients. Tax rules and their application may change in the future.