Crystallisation and Annuities

dunstonh

Spivo46 said:

Secret2ndAccount said:

SVaz said:

“You cannot split a crystallised fund either (so you cannot take a portion)”

Do you mean that nobody can use part of a crystallised pot for either a Lifetime Annuity or a Fixed term one?   With any Pension provider?  

That seems bizzarre. 

So what options for guaranteed income are there other than using part of a crystallised pot to set up a Gilt ladder?  

You CAN use part of a crystallised pot to buy a lifetime annuity.
The law: Finance Act 2004, Schedule 28, Paragraph 10(4)
HMRC's tax manuals: PTM062560 and PTM062570

You can also break up a crystallised pot in the case of a divorce

You cannot, in general, make a partial transfer out of a crystallised pot.

Of course, that's just the rules. Maybe some providers don't want to deal with it, so your choice of annuity might be restricted. I can't speak to that. We see plenty of examples around here where something is allowed but you can't do it.

Thank you - so for clarity, i could in theory buy a lifetime annuity with part of my pot and not a fix term annuity. RL inform me that it all or nothing! So, RL just dont want the hassle?

The reason you are getting conflicting info is down to what RL offer and what they don't offer and what you have asked.   
RL do not offer lifetime annuities. 
They do not offer fixed-term annuities.   
You cannot split for a fixed term annuity (and your reference in post 1 was fixed term income)

A fixed-term annuity is not classified as secure income.  It is classified as flexible benefits.   

There are platforms where you could appear as if you are spliing it, though, as they allow you to hold the fixed term annuity on the platform (along with any unit-linked funds, etc, that you may want to hold).  But that is probably muddying the water for you, as there are no DIY platforms that currently offer that.  In those scenarios, it would be like holding the annuity as an asset within the platform SIPP. All income is retained in the SIPP and it matures inside the SIPP.  Hence, it is not actually splitting it in reality.

Spivo46

QrizB said:

Spivo46 said:

RL inform me that it all or nothing! So, RL just dont want the hassle?

RL aren't authorised to provide advice.

Their customer service reps are able to tell you what you can do with RL (without any comments on whether it's a good idea or not) but can't tell you what you can do if you look elsewhere.

Thanks for the input, but just to be clear, RL are not offering advice. In simple terms, they are telling me that i am unable to take some of my ROYAL LONDON pension portfolio to buy a fixed term income or fixed term annuity with another provider. They are also not in a position to offer this type of product. 

Spivo46

dunstonh said:

Spivo46 said:

Secret2ndAccount said:

SVaz said:

“You cannot split a crystallised fund either (so you cannot take a portion)”

Do you mean that nobody can use part of a crystallised pot for either a Lifetime Annuity or a Fixed term one?   With any Pension provider?  

That seems bizzarre. 

So what options for guaranteed income are there other than using part of a crystallised pot to set up a Gilt ladder?  

You CAN use part of a crystallised pot to buy a lifetime annuity.
The law: Finance Act 2004, Schedule 28, Paragraph 10(4)
HMRC's tax manuals: PTM062560 and PTM062570

You can also break up a crystallised pot in the case of a divorce

You cannot, in general, make a partial transfer out of a crystallised pot.

Of course, that's just the rules. Maybe some providers don't want to deal with it, so your choice of annuity might be restricted. I can't speak to that. We see plenty of examples around here where something is allowed but you can't do it.

Thank you - so for clarity, i could in theory buy a lifetime annuity with part of my pot and not a fix term annuity. RL inform me that it all or nothing! So, RL just dont want the hassle?

The reason you are getting conflicting info is down to what RL offer and what they don't offer and what you have asked.   
RL do not offer lifetime annuities. 
They do not offer fixed-term annuities.   
You cannot split for a fixed term annuity (and your reference in post 1 was fixed term income)

A fixed-term annuity is not classified as secure income.  It is classified as flexible benefits.   

There are platforms where you could appear as if you are spliing it, though, as they allow you to hold the fixed term annuity on the platform (along with any unit-linked funds, etc, that you may want to hold).  But that is probably muddying the water for you, as there are no DIY platforms that currently offer that.  In those scenarios, it would be like holding the annuity as an asset within the platform SIPP. All income is retained in the SIPP and it matures inside the SIPP.  Hence, it is not actually splitting it in reality.

I appreciate the feedback and thoughts around the other options available to me. Yes, you are correct, it does muddy the water for me as a pension DIY guy with limited knowledge and confidence, this is why i believe my IFA set this option up with RL 8 years ago. I opted for no ongoing support with the IFA and have only switched between the RL governed portfolios. I will settle on my current set up and hope for a reasonable long term outcome!

DRS1

A random thought.  Is it possible for the OP to spend the whole of the RL pension on a Fixed Term annuity with a maturity value?  So there would be an amount left over at the end of the fixed term.  I confess I am not sure what you are able to do with the maturity value - eg can you only spend it on another annuity or can you hold it in a crystallised pension.

Spivo46

DRS1 said:

A random thought.  Is it possible for the OP to spend the whole of the RL pension on a Fixed Term annuity with a maturity value?  So there would be an amount left over at the end of the fixed term.  I confess I am not sure what you are able to do with the maturity value - eg can you only spend it on another annuity or can you hold it in a crystallised pension.

I did consider this and used money helper as a guide. To be truthful i felt uncomfortable parting with the whole pot, even if it was only for 5 to 10 year options (not sure why i felt this way). The maturity value can be used to invest in another drawdown portfolio, annuity or fixed term product. 

Spivo46

£400,000 over 10 year term and £400,000 returned at the end of the term
Pays £19,244 per year
£192,440  over the 10 years