When coming to drawdown your pension, the scheme administrator will run a benefit crystallisation event (BCE). Here we explore this complex area and how it works in practice.
A Benefit Crystallisation Event (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.
Benefits are tested not only when benefits come into payment before their 75th birthday but also after their 75th birthday. Even if the value of a member's fund was within the lifetime allowance when benefits were first drawn, subsequent investment growth, or the failure to draw income at least equal to the investment growth, could result in a lifetime allowance tax charge at age 75.
Please note: BCEs 1 and 6 where the member receives a pension commencement lump sum, usually take place at the same time.
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