An uncrystallised funds pension lump sum (UFPLS)
When Pension Freedoms were introduced in 2015, it became possible to take your entire pension pot in one go. This is known as an “uncrystallised funds pension lump sum” (UFPLS).
You can withdraw some or all your pension fund as a lump sum, 25% of which will be tax-free, with the rest taxed as income. If you choose to take a partial UFPLS, your residual fund remains invested.
Taking a large pension amount in one go can be a good choice if you have big-ticket items planned for the early years of retirement, such as world travel or house renovations. You will need to budget responsibly though, as once you have taken the full amount, the onus is on you to ensure your pot doesn’t run out.
Also, be aware that a one-off payment could push you into a higher tax bracket. Speak to us if you need help understanding the tax implications of your chosen option.