The main part of the Annuity Policy window stores the basic data on the annuity policy.
The Arrangements box shows how the purchase price should be taken from each of the member’s subfunds.
Usually an annuity will be bought from the member’s vested funds. Omni will assume that the whole of the purchase price should be deducted from the member’s native vested fund.
Occasionally a member will not use drawdown and an annuity can be bought from the member’s unvested fund (the Vesting Event will have a ‘Type’ of ‘Annuity’). The ‘Unvested Fund’ amount will need to be entered in this window for the Fund Split to work correctly.
Similarly, any part of the annuity that relates to the funds vested before April 2006, will need to be entered, as well as any parts relating to transfers in drawdown.
When the fund split is carried out, Omni will check the amounts entered here for the subfunds:
a) if the total for the subfunds is not zero but does not match the annuity purchase price, the fund split will terminate and the user will have to clean the data
b) if the total for the subfunds is zero, then
- If unvested fund and vested fund at start of the period are zero - annuity comes from pre2006 vested fund
- if unvested fund and pre 2006 vested fund at start of the period are zero - annuity comes from vested fund.
- if vested fund and pre 2006 vested fund at start of the period is zero - annuity comes from unvested fund
- else – annuity comes from vested fund (with warning) – user should have entered subfund splits
When an annuity is bought there is a test to see whether more of the lifetime allowance is used up, known as a BCE4. This extra lifetime allowance should not be stored on the annuity screen but stored as a separate BCE on the Vesting Events screen.
The annuity provider will have to report the LTA used when the member originally crystallised the part of the fund that led to the annuity purchase. This amount should be stored in the ‘LTA Transferred’ used.
See also – Fund Split