Uncrystallised funds pension lump sums explained

One of the options available to individuals with money purchase benefits is to take an uncrystallised funds pension lump sum (UFPLS).
Key facts
  • The individual must usually be over age 55 or over 57 from 6 April 2028.
  • They must have some unused lifetime allowance.
  • It is only available from uncrystallised money purchase funds.
  • It is not available to individuals with primary or enhanced protection where there is greater than 25% tax-free cash.
  • It will trigger the money purchase annual allowance.

HMRC Pensions Tax Manual - PTM063300: Member benefits: lump sums: uncrystallised funds pension lump sum (UFPLS)

What is an uncrystallised funds pension lump sum?

The pension flexibility brought in from April 2015 introduced some new ways to take retirement savings. Depending on the product it may be possible to take multiple partial UFPLSs rather than the whole fund at once. Certain conditions apply to UFPLS and are outlined below.


The individual must be over age 55, or 57 from 6 April 2028 (or eligible for early retirement due to ill-health or has a protected pension age).

The individual must have available lifetime allowance:

  • Those under 75 can only have an UFPLS up to their available lifetime allowance. Any excess over the lifetime allowance will be treated as a lifetime allowance excess lump sum.
  • Those age 75 and over can have an UFPLS where only part of the UFPLS is within their remaining lifetime allowance.
    • That part of the lump sum equal to 25% of the individual’s available lifetime allowance at the time it is paid is not liable to tax, so it is paid tax-free.
    • The rest of the lump sum is taxed as pension income in the same way as a pension paid under a registered pension scheme. This means the payer of the lump sum will deduct and account for income tax under the requirements of the PAYE regulations.

It is only available from uncrystallised funds, it cannot be paid from drawdown funds as they are crystallised funds.

It is not available if:

  • The individual has primary or enhanced protection where the tax-free cash lump sum entitlement is greater than 25%.
  • The funds are from a disqualifying pensions credit from a pension sharing order. This is a pension credit that has come from crystallised funds and no tax-free cash is payable.
  • The individual has a lifetime allowance factor and immediately before the payment of the UFPLS they have no lifetime allowance left or is less than 25% of the sum being paid.


An UFPLS is not the same as tax-free cash (pension commencement lump sum)

This means the option can be offered by schemes which cannot offer a drawdown option but it also has consequences for taxation.

If the individual is below age 75, 25% of the value of the UFPLS is tax-free. 75% of the value of the UFPLS is added to the individual's taxable income in that year and taxed accordingly.

If the individual is 75 or over, 25% of the lower of the value of the UFPLS and the available lifetime allowance is tax-free. The balance is added to their taxable income in that year and taxed accordingly.

Taking an UFPLS will also trigger the money purchase annual allowance of £4,000.

Case study:

Nabeel, aged 55, who lives in England and is a basic rate tax payer, decides he needs a lump sum of £10,000.

  UFPLSPCLS via drawdown, 0% income
Amount crystallised £11,765 before tax £40,000
Tax-free amount £2,941 £10,000
Amount added to taxable income £8,824 £0
Crystallised fund £0 £30,000
Income after tax £7,059 £0
Total received £10,000 (£2,941 + £7,059) £10,000
Annual allowance for future contributions £4,000 £40,000


UFPLS replaced triviality for money purchase arrangements and is available from age 55 or 57 from 6 April 2028 and is not limited to £30,000.

Money purchase annual allowance

Taking benefits using a full or partial UFPLS triggers the money purchase annual allowance.

Pension input periods

Both the annual allowance and money purchase annual allowance are based on contributions made in the relevant pension input period. Where the money purchase annual allowance is triggered part-way through a pension input period it will only apply to contributions made after the trigger. It is therefore possible to minimise the effect by careful timing of the first withdrawal.

Further information


The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.