Flexible Pension Alternative - Uncrystallised Funds Pension Lump Sum (UFPLS).
Flexible pension drawdown rules started in April 2015.
Just because pension law allows flexible pension drawdown this does not mean that your pension scheme or pension company will offer it.
There is an alternative: Uncrystallised Funds Pension Lump Sum (UFPLS)
This is a new concept that started in 2015. A lump sum drawn directly from uncrystallised money purchase pensions.
The lump sum is a combination of:
It is possible to take a series of UFPLSs, each of which will be treated as a mix of 25% tax free cash and 75% taxable funds.
The disadvantage is that unlike flexible access drawdown, it isn’t possible to take the tax free cash without receiving taxable income.
Once an individual takes a UFPLS, the £4000 money purchase annual allowance applies i.e. the maximum total payments that can be paid into a pension fund for you each year reduces from £40000 to £4000.
Some restrictions apply to members with primary protection, enhanced protection or lifetime allowance enhancement factors affecting their tax free cash entitlement.