Schedule the future crystallisation of a money purchase pension (UK)

UK - Should withdrawals from money purchases be scheduled as crystallisations or planned withdrawals?

This consideration is especially important if you plan to take a large lump sum withdrawal of cash from the crystallisation of a money purchase.

Pension Commencement Lump Sum (PCLS) withdrawals from money purchases are still best scheduled on the Pensions > Money Purchase or Defined Contribution screens under Crystallisations unless you are planning on making further pension contributions into those pensions (this is discussed further in this article).*

Whereas regularly scheduled incomes from pensions or even large one-off withdrawals made for special purchases or debt payoffs are best scheduled on the Planned Withdrawals screen.

When scheduled as a general crystallisation strategy on the Money Purchase screen , the software will know to sweep any surplus lump sum from the crystallisation into the owner’s default cash account, if it isn’t scheduled to be transferred elsewhere.

* If you intend to fully (100%) crystallise a pension in any given year via the Crystallisation menu on the left hand side of the screen and the client is still contributing to that pension the software will not make those pension contributions in the year of crystallisation.

The best way to model this is to set up a Planned Withdrawal using the 'Type' Percentage 25% and Flexi. This will crystallise the pension in full, pay out the TFC and continue to make the pension contributions into the pension.

You will need to remember to further crystallise the pension at a later date once the pension contributions have finished.

You can then check Year View > Pensions to see the full amount being crystallised, the remainder (after the tax free cash) going into the Linked Drawdown Plan and then in the MP plan the pension contributions continuing.

Crystallisation of a Money Purchase Pension

This screen will usually be disabled (greyed out) when you first come to it unless a set of crystallisation instructions had been added to the case previously and the “Apply Crystallisation Instructions” toggle was toggled on.

To schedule a crystallisation:

1. Go to the Dashboard screen and open the money purchase or as you are entering a new money purchase, click the Crystallisations tab in the left menu.

2. Toggle on “Apply Crystallisation Instructions” at the top of the screen.

3. Click Add Crystallisation.

Crystallisations can be scheduled based on a percentage of the account or in a fixed amount, with or without inflation.

You can also choose the level of Tax Free Cash you require;

Percentage of Crystallised Amount (you choose the amount that you require, may be over 25% or under).
Tax Free Cash Only (this works with the % amount that you have entered into the Carryover Assumption screen)
No Tax Free Cash at all.

Crystallising Less than One Hundred Percent of a Pension

If the client is planning on continuing making pension contributions into the plan but looking to crystallise the pension, in order to make future contributions there must be some of the pension remaining after the crystallisation.

If you crystallise 100% of the pension this will disappear from the Dashboard and no future contributions will be able to be made.

If less than 100% of the pension is scheduled to be crystallised initially, you could click Add Crystallisation to schedule a further crystallisation.

Provided your crystallisations are set in percentages (not as an amount), logic is present so that if you crystallise less than 100% of a pensions then any further percentage-based liquidations will be limited accordingly.

For example, If you were to schedule 75% of the pension to be crystallised initially, then your next crystallisation would be automatically limited to 25%, as shown below.

Reactivating Past Crystallisation Instructions

Even if the Crystallisation screen is deactivated (greyed out) initially, it may still show a set of legacy crystallisation instructions.

AdviserGo will retain old crystallisation instructions that have since been disabled.

If you want these to re-apply you can toggle on the 'Apply Crystallisation Instructions' and this will re-activate those instructions.

If you want to change this initial set of instructions, crystallising less or to change the crystallisation event, toggle on “Apply Crystallisation Instructions” and click the box showing the crystallisation instructions to make changes to them.

How to Switch Off Crystallisation Instructions

Switching off pension crystallisations is easy. Perhaps you’ve entered crystallisation instructions only to find you are better served by allowing the software to take income from the pension as needed (the software’s default).

Maybe you would rather take a more hands-on approach, scheduling a pension income on the Planned Incomes screen where withdrawals can be set as UFPLS or flexi-access. If you have entered crystallisation instructions and then later decide not to use them:

1. Go to the Dashboard in AdviserGo and open the money purchase.

2. Select the Crystallisations tab.

3. Toggle off "Apply Crystallisation Instructions", top-left. The screen should become greyed out (be deactivated), indicating the crystallisation instructions are no longer in effect.

The crystallisation instructions will remain on screen, however, should you ever decide to reactivate them by toggling on "Apply Crystallisation Instructions".