An Uncrystallised Funds Pension Lump Sum (UFPLS) is a new way of accessing your pension benefits which became available from the 6th April 2015. It can only be taken from funds not already in drawdown. It allows you to take a one off payment or series of payments whilst keeping the remainder of your pension uncrystallised.
You can normally take an UFPLS at any time from age 55 (or earlier if you meet the ill health conditions) and like drawdown it is not necessary to stop working or ‘retire’ when you take your benefits. The minimum pension age will increase to age 57 from April 2028.
When you take an UFPLS payment, 25% of the payment will be tax free (like a PCLS) and 75% of the payment will be taxed as pension income at your marginal rate of income tax.
Taking an UFPLS payment will trigger the Money Purchase Annual Allowance rules (outlined in the contribution section) which will reduce your annual allowance from £40,000 to £4,000 per annum for money purchase savings.