Uncrystallised Funds Pension Lump Sum (UFPLS)
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