What is Uncrystallised Funds Pension Lump Sum (UFPLS) – series of withdrawals?
Taking a series of Uncrystallised Funds Pension Lump Sums (UFPLS) is effectively a form of phased retirement (or “staggered vesting”) which is a means of taking retirement benefits from an uncrystallised pension plan without first having to move the funds into a drawdown pension plan. The main objective is to provide a greater degree of control and flexibility over your pension fund.
Compared to a conventional annuity, where the basis of income is fixed at outset and is unable to be amended, taking a series of UFPLS payments allows more flexibility with income being varied according to changing needs.
In order to take advantage of UFPLS there are a number of conditions that need to be met:
- You must be aged 55 or over or, if younger, meet ill-health conditions.
- The payment must be payable from your uncrystallised rights held in a money purchase pension.
- If you are aged under 75, you must have more lifetime allowance remaining than the lump sum required.
- If aged over 75, you must have some lifetime allowance remaining.
- If you have primary or enhanced protection with protected tax free cash or a lifetime allowance enhancement factor but the lump sum allowance is less than 25% you can’t take your benefits as a UFPLS.
- Where scheme specific lump sum protection exists, the right to the higher TFC would have to be given up in order to use UFPLS.