What is an uncrystallised funds pension lump sum?
Answered 17 March 2026
Here is a comprehensive answer on what an uncrystallised funds pension lump sum (UFPLS) is:
What is an Uncrystallised Funds Pension Lump Sum (UFPLS)?
What the law says
An uncrystallised funds pension lump sum (UFPLS) is an authorised member payment that can be paid from uncrystallised funds held in a money purchase arrangement (that is not a collective money purchase arrangement) under a registered pension scheme.
A lump sum qualifies as a UFPLS only if it meets all of the following conditions:
- It is paid on or after 6 April 2015 in relation to a money purchase arrangement that is not a collective money purchase arrangement;
- It is paid when the member has reached the normal minimum pension age (currently 55, rising to 57 from 6 April 2028), or an earlier age if the ill-health condition is met or the member has a protected pension age;
- It is not a pension commencement lump sum;
- It is not a trivial commutation lump sum;
- Immediately before the member becomes entitled to it, the sums and assets used to provide it must represent the member's uncrystallised rights (as defined by sections 212(1) and (2) Finance Act 2004).
Tax treatment is set out in s.637D ITEPA 2003: 25% of the lump sum is free of income tax, and the remaining 75% is charged to income tax as pension income in the same way as a pension under a registered pension scheme. If 25% of the lump sum exceeds the "permitted maximum" (the lower of the member's available lump sum allowance and lump sum and death benefit allowance), the excess is also taxed as pension income.
HMRC guidance / practice
HMRC describes a UFPLS broadly as a payment where uncrystallised funds (funds not yet used to provide benefits) held under a money purchase arrangement are paid as a lump sum without any connected pension.
Key practical points from HMRC guidance:
- Uncrystallised funds are funds held in respect of the member which have not yet been used to provide that member with a benefit under the scheme. For cash balance arrangements, this means the funds there would be if the member decided to draw benefits on a particular date.
- There is no limit on the number of UFPLS payments a member can take — subject to scheme rules, a member may take their entire uncrystallised funds as a single lump sum or as multiple lump sums spread over time.
- A UFPLS is a relevant benefit crystallisation event and is tested against both the lump sum allowance and the lump sum and death benefit allowance.
- Where part or all of the lump sum is taxable, the payer must deduct and account for income tax under PAYE regulations.
- Payment of a UFPLS is a trigger event for the money purchase annual allowance.
Citation sources
Karen has a money purchase arrangement with a fund value of £8,000 in a non-occupational pension scheme and wants to access all the funds in the arrangement as a lump sum. As the fund value does not exceed £10,000 Karen can take the whole amount as a ‘small lump sum’ as she meets the necessary conditions for such a lump sum to be paid, providing she has not previously received three such lump sums from non-occupational pension schemes. The lump sum is paid 25% tax free with the remainder of £6,0
Paragraph 4A schedule 29 Finance Act 2004 Section 636A(1A) to (2) ITEPA 2003 This type of lump sum is payable from 6 April 2015. Broadly, it is when uncrystallised funds (funds not yet used to provide benefits) held under a money purchase arrangement are paid as a lump sum without any connected pension. A member may take as many UFPLS payments as their scheme will allow. PTM063300 provides guidance on all the conditions that must be satisfied for a payment to be an UFPLS. Normally the tax treatm
Sections 579A and 637D, P and Q Income Tax (Earnings and Pensions) Act 2003 Paragraph 12A schedule 29 Finance Act 2004 An uncrystallised funds pension lump sum is a relevant lump sum and is also a relevant benefit crystallisation event. Payment of an UFPLS is tested against both the lump sum allowance and the lump sum and death benefit allowance, The UFPLS is taxed as follows: 25% is not liable to tax, that is, it is paid tax-free unless the first 25% exceeds the "permitted maximum" 75% is taxed
Section 166(1) and paragraph 4A(1)(a) schedule 29 Finance Act 2004 From 6 April 2015, an uncrystallised funds pension lump sum(UFPLS) can be paid as an authorised member payment to a member from uncrystallised funds held in a money purchase arrangement, that is not a collective money purchase arrangement, for that member. Uncrystallised funds are funds held in respect of the member which have not, as yet, been used to provide that member with a benefit under the scheme. If the money purchase arr
Paragraph 4A schedule 29 Finance Act 2004 To be an uncrystallised funds pension lump sum, a lump sum must: be paid on or after 6 April 2015 in relation to a money purchase arrangement that is not a collective money purchase arrangement be paid when the member has reached the normal minimum pension age (currently age 55 but this will increase to age 57 from 6 April 2028) or an earlier age if the member meets the ill-health condition (see PTM062100) or has a protected pension age (see PTM062210) n
Part 9 Pension income CHAPTER 15A Lump sums under registered pension schemes Tax treatment of authorised lump sums Uncrystallised funds pension lump sums 637D 1 Subject to subsection (2) , where an uncrystallised funds pension lump sum is paid under a registered pension scheme— a no liability to income tax arises on 25% of the lump sum, and b section 579A (pensions) applies in relation to the remainder of the lump sum as it applies to any pension under a registered pension scheme. 2 If— a an unc