Default Crystallisation and Drawdown Income Schedule for Money Purchases
Unless set otherwise, money purchase benefits will be retained within the money purchase wrapper for as long as possible, with benefits being crystallised on an 'As Needed' basis.
The 'As Needed' setting will allow the software to take a series of Uncrystallised Funds Pension Lump Sum (UFPLS) withdrawals, as and when needed and, by default, this instruction will take effect from the individual's Retirement event; of course, 25% (by default) of any withdrawals will be paid tax-free, with the balance being treated as taxable income.
As such, the software's default setting, with regard to money purchase benefits, does not entail moving benefits into the Linked Drawdown Pension (Pension Drawdown.)
Schedule the Future Annuitisation of a Money Purchase account
An alternative retirement planning scenario would involve using money purchase benefits for the purchase of an annuity. This can be scheduled either using an event, or the individual's age, via the Annuitization panel, available under each money purchase pension. When scheduling the purchase of an annuity, be sure to toggle the panel’s Annuitisation Applies switch.
If Age is selected, you would complete the screen with the relevant age in which the annuity is to be purchased;
- The amount of the pension to be annuitized,
- Any guarantees on the annuity (Years certain),
- % amount of TFC paid out to the client,
- Amount to be paid on a level or escalating basis,
- single/joint life
- Annuity rate, whether that is Assumed Interest Rate or Specified Annuity Rate.
For more information on how annuity rates are calculated in Voyant click here Annuity rates - Options for calculating future annuity payments
If Event is selected, you would create the relevant Event on the Timeline as guided by the system in the Annuitisation screen. You would then complete the same fields as per above (Age);
- The amount of the pension to be annuitized,
- Any guarantees on the annuity (Years certain),
- % amount of TFC paid out to the client,
- Amount to be paid on a level or escalating basis,
- single/joint life
- Annuity rate, whether that is Assumed Interest Rate or Specified Annuity Rate.
For more information on how annuity rates are calculated in Voyant click here Annuity rates - Options for calculating future annuity payments
Once completed, click Save.
If you go into Year View > Pensions at the age when the Annuity is due to commence you will see the amount of Scheduled Annuitised Amount, the Actual Annuitised Amount and the amount of income that is due to be received from the Annuity.
This can be used to check the figures against the Annuity Illustration that you may have received from the provider for the pension.