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The Collective Retirement Account (CRA)

The CRA is a Defaqto Gold Star Rated registered pension scheme. It is the most flexible pension in the market, allowing your clients to continue accumulating retirement savings at the same time as taking retirement income. Unlike many pension arrangements, the CRA does not require clients to crystallise at age 75.

The CRA delivers all of the options below within the same account. This gives you the withdrawal methods you need to help ensure your clients don’t pay too much in tax, can gain access to their money when they need it, and have the option of leaving a tax-efficient legacy if that’s part of their plan.

All of these options are provided at no additional cost. There are no charges for withdrawing income.

  • Flexi-access drawdown
  • Capped Drawdown, available for crystallised transfers already in capped drawdown.
  • Small pots
  • Taxable lump sums from uncrystallised funds via flexi access drawdown
  • Full encashment
  • The open market option
  • Beneficiaries’ flexi-access drawdown
  • Regular income withdrawals

Regular income withdrawals

In 2015 we introduced two choices of regular income withdrawals from the Collective Retirement Account:

  • Initially, income is taken only from the client’s tax-free cash, thereby building a taxable drawdown fund for future use with each encashment.
  • Alternatively, funds can be encashed to generate an income payment, of which 25% is tax-free and the remainder is subject to income tax at the client’s marginal rate.

What type of clients could benefit from these options?

These new facilities may be suitable for clients who have no immediate need to access large amounts of their tax-free cash entitlement, but who do need a level of regular income to be generated from their pension savings.

What are the benefits?

  • Tax-free cash taken on a regular basis will provide a source of retirement income on which the client will suffer no income tax liability.
  • Minimising encashment by delivering regular income on an ‘encash-as-you-go basis’ means that the client will keep the maximum level of pension savings fully invested. This enables them to benefit from future growth potential – not only increasing the potential for future income, but also leaving as much as possible available for legacy planning.

The tax treatment and efficiency of these options will depend on the individual circumstances of each client. Tax rules and their application may change in the future.

The tax treatment and efficiency of these options will depend on the individual circumstances of each customer. Tax rules and their application may change in the future.

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