Uncrystallised Funds Pension Lump Sum (UFPLS)
A way to withdraw cash directly from your pension pot without moving into drawdown first.
An Uncrystallised Funds Pension Lump Sum, or UFPLS, is a method of withdrawing money from a defined contribution pension without first moving into flexi-access drawdown or buying an annuity. Each time you take a UFPLS, 25% of the withdrawal is tax-free and the remaining 75% is taxed as income at your marginal rate. The term "uncrystallised" means the pension funds have not yet been formally designated for any particular retirement income option.
A UFPLS can be useful if you want to take occasional lump sums from your pension without committing to a regular drawdown arrangement. For example, you might take a lump sum to cover a specific expense while leaving the rest of your pot untouched. You can take one or more UFPLS payments over time, and the remaining funds stay invested in your pension.
There are some important things to consider. Once you take a UFPLS, the money purchase annual allowance (MPAA) is triggered, which reduces the amount you can contribute to defined contribution pensions and still receive tax relief to £10,000 per year. Taking a large UFPLS could also push you into a higher tax bracket for that year, so it is worth thinking about the timing and size of withdrawals. Not all pension schemes offer UFPLS as an option, so check with your provider before planning to use this route.