What is a Benefit Crystallisation Event (BCE)?

A BCE is when the pension scheme administrator (or in certain circumstances, the pension scheme member’s personal representatives) must test the value of the benefits in a member’s pension scheme that are being crystallised, or deemed to be crystallised, against the member’s lifetime allowance.

The main BCE events:

The member takes benefits before age 75

BCE 1 – member designates funds to provide a drawdown pension

BCE 4 – member uses funds to buy a lifetime annuity

BCE 6 - member becomes entitled to a pension commencement lump sum (tax-free lump sum) or an uncrystallised funds pension lump sum

Please note: BCEs 1 and 6 where the member receives a pension commencement lump sum, usually take place at the same time.

On the member’s 75th birthday

BCE 5A – member reaches age 75 with drawdown pension funds (crystallised funds)

BCE 5B – member reaches age 75 with unused uncrystallised funds

On the member’s death before age 75

BCE 5C – unused uncrystallised funds are designated to a beneficiary’s drawdown pension fund

BCE 5D – unused uncrystallised funds are used to purchase an annuity for a beneficiary

BCE 7 – a lump sum paid to a beneficiary from unused uncrystallised funds

When a member transfers pension funds to a qualifying overseas pension scheme (QROPS) before age 75

BCE 8 – uncrystallised funds and any increase in value of crystallised funds

Any event prescribed in regulations as being a crystallisaion event

BCE 9 -payment of arrears in pension instalments after death, certain payments of tax-free cash based on pension errors and tax-free cash type payments paid after death.

For more information:
Pension scheme benefits and the lifetime allowance
Lifetime allowance protection
Pensions or annuities that came into payment before 6 April 2006
Example of BCEs