At age 75 multiple review dates can be aligned

Capped Drawdown pension reviews can seem complex. Some pension members will have a number of different pension reviews dates. This might be down to entering phased drawdown or having pension schemes with a number of pension providers.


Tranche One

Benefit review period 5th June 2016 to 4th June 2019.

Pension Year is 5th June to 4th June

Max Income £5,000


Tranche Two

Benefit review period 21st April 2015 to 20th April 2018.

Pension Year is 21st April to 20th April.

Max income £10,000


The above example shows two different review dates and differing pension years might mean two sets of charges, complicated to understand overall income and more paperwork.

Once over the age of 75 a review on each tranche will occur every year with charges occurring on each review.

The client might choose to change one of the tranches pension year to match the other or move both tranches to a completely different pension year i.e. to mirror the tax year.

It is not possible to change the pension year for an arrangement where the member is under the age of 75. At age 75 or over, it may be possible to change the pension year.

HMRC rules for realignment:

The pension scheme cannot change the pension year for an arrangement without the member’s consent.

The pension year for an arrangement can only be changed once.

The pension year for an arrangement can be changed by bringing the current pension year to an end either early or late. The maximum drawdown pension will remain the same for the pension year, even though it is shorter/longer than usual.

The pension year of each arrangement can be different from the pension year for other arrangements under the scheme. The member can choose to change the pension year for just one, some or all of the arrangements under a scheme.

Whilst the member can make the pension arrangements have the same pension year, the maximum drawdown pension calculations are still carried out separately for each arrangement, and the limit on the drawdown pension still applies per arrangement, not to the whole scheme.


By Michael Baber | July 25, 2017 | 0 Comments

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