Uncrystallised funds pension lump sums (UFPLSs)
Uncrystallised funds pension lump sums (UFPLSs)

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Uncrystallised funds pension lump sums (UFPLSs)
  • What is an uncrystallised funds pension lump sum?
  • When can a UFPLS be paid?
  • Conditions for UFPLS payment
  • Special circumstances where UFPLS can be paid since 6 April 2016
  • Circumstances where no UFPLS can be paid
  • Tax treatment
  • Payment before age 75
  • Payment on or after age 75
  • UFPLSs and the pension commencement lump sum
  • More...

THIS PRACTICE NOTE APPLIES IN RELATION TO MONEY PURCHASE ARRANGEMENTS

What is an uncrystallised funds pension lump sum?

From 6 April 2015, members of money purchase arrangements who have reached the age of 55 (or met the ill-health condition) may, if the scheme permits, take funds from their pension pot as a single or a series of lump sums. These lump sums are known as uncrystallised funds pension lump sums (UFPLS).

On 6 April 2015, UFPLSs became a type of authorised member payment under the Finance Act 2004 (FA 2004). The first 25% of a UFPLS is tax-free and the remaining 75% is taxed at the member's marginal rate of income tax. For further information, see Tax treatment below.

UFPLSs are one of several retirement options open to members of money purchase arrangements since 6 April 2015. They apply only to uncrystallised funds and so are unavailable insofar as the member has opted for other retirement options, namely:

  1. buying an annuity, subject to the ability to take a 25% tax-free pension commencement lump sum (which remains unchanged), or

  2. if the scheme permits:

    1. taking a scheme pension, or

    2. entering into drawdown, with the option of taking a 25% tax-free pension commencement lump sum and any amount drawn down thereafter being treated as income and taxed at the member's marginal rate of income tax

For further information on the other retirement

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