Uncrystallised Funds Pension Lump Sum (UFPLS)
UFPLS is another option available which allows the investor to avoid going into pension drawdown or buying an annuity.
An UFPLS can be paid from uncrystallised money purchase funds as a lump sum – there will be a 25% tax-free element and the balance will be taxed at the member’s marginal rate of tax. UFPLS cannot be taken from a final salary pension scheme.
The investor (if permitted) can take their entire pension fund in one transaction or take a series of UFPLS’s, or take a series of smaller UFPLSs, each of which will have a 25% tax-free element. This option is not too dissimilar to using a bank account. The reality though is more complex.
Please look at the conditions for the payment of an UFPLS:
- The lump sum must be paid from a money purchase arrangement.
- The member must be over age 55 and have some lifetime allowance available.
- Cannot be paid from past crystallised funds.
- The main uses for UFPLS are as follows:-
- To take the entire pension fund in one go.
- To take the pension commencement lump sum, and then unlimited withdrawals
- To use as an emergency fund
Uncrystallised Funds Pension Lump Sum (UFPLS) was introduced in April 2015.