Taking your pension as lump sums

In some cases the best way to take money out of your pension is to take a series of lump sums over time, instead of taking all the tax-free cash in one go. When you do this, 25% of whatever you withdraw is free of tax while the other 75% of the money you withdraw will be taxed like any other earned income you receive. This way, you can make multiple withdrawals.

When you do this, it’s called taking an Uncrystallised Funds Pension Lump Sum (UFPLS for short).

You can leave your money in your pension pot and take lump sums from it as and when you need, until your money runs out or you choose another option.

Lump sum withdrawal pie-chart

When to consider UFPLS

The value of investments can go down as well as up, so you may get back less than you invest. This information is not a personal recommendation for any particular product, service or course of action.

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Close to retirement but unsure about the options and pitfalls ahead? We can offer guidance and advice to help you find the best solution for your retirement.

Call us on 0800 368 6882, Monday to Friday, 9am - 5pm.

Pension Wise

The government’s Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online or over the telephone on 0800 138 3944.


Calculate the income tax on your withdrawals

When you withdraw money from your pension, this money may be subject to income tax.  Use our calculator to help you understand how much tax you might have to pay.

UFPLS will affect your future contributions

If you think you might want to top up your pension pot in the future, for instance because you want to keep working part time, then you need to be aware that taking money out using UFPLS could affect the amount you can pay in and receive tax relief on.

If you think you’ll want to continue topping up your money purchase pension pot with more than £4,000 a year after you retire, then you may want to consider other options.

If you take money out in this way, you may only be able to receive tax relief on up to £4,000 a year. If you exceed this figure, you may need to pay tax to HMRC. This is known as the money purchase annual allowance (MPAA).

To find out more about taking lump sums from your pension call us on 0800 368 6882, Monday to Friday, 9am - 5pm.

The money purchase annual allowance

Find out how taking more than the 25% tax-free amount could affect your annual allowance.

Make life easier by bringing your pensions together

Combining your pensions into a Self-Invested Personal Pension (SIPP) can make it easier to manage your savings - and it could be cheaper, with lower fees than you’re currently paying.

Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please contact us on 0800 368 6882, Monday to Friday, 9am - 5pm, or refer to an authorised financial adviser. Pension money cannot normally be withdrawn until age 55.