What the TTFAC? The pension acronym that can cause tax-free cash confusion

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Shares Magazine

10 September 2026

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While the abolition of the lifetime allowance for pensions was largely welcomed, it also brought a new collection of jargon. Near the top of that list sits the transitional tax-free amount certificate, or TTFAC.

Most people will not need a TTFAC. But it is worth investigating if you accessed pension benefits before 6 April 2024 and took less tax-free cash than the standard calculation assumes.

The key is to check the figures before applying or taking further benefits. While a certificate can increase your remaining lump sum allowance, it can also reduce it and once a valid certificate has been issued it cannot be undone.

Old vs new rules

Before the lifetime allowance was abolished, tax-free lump sums were limited by the lower of two amounts:

• 25% of the value of the funds crystallising; and
• 25% of the remaining lifetime allowance.

Since 6 April 2024, there is no longer a lifetime allowance, but a new set of allowances that limit the value of tax-free cash that can be taken in both a pension holders’ lifetime (the lump sum allowance), after their death (the lump sum and death benefit allowance) and if they transfer the pension overseas (the overseas transfer limit).

The maximum permitted tax-free lump sum for a pension holder is still the lower of two amounts, but they are now:

• the remaining ‘new’ lump sum allowance (LSA); and
• 25% of the funds crystallising.

If you accessed a pension before 6 April 2024, there’s a standard calculation that tells you how much of the new lump sum allowances you’re deemed to have used.

Rather than looking at what tax-free lump sum(s) you’ve received, it assumes that 25% of any lifetime allowance used before 6 April 2024 was taken as tax-free cash. For many people that assumption works perfectly well, but it’s not always the case.

Standard calculation = % lifetime allowance used x £1,073,100* x 25%

*If you hold lifetime allowance protection, substitute your protected allowance here

Where TTFACs come in

A TTFAC is a record of the monetary value of tax-free cash you received before 6 April 2024, rather than relying on the standard calculation assumption.

If you accessed pension benefits under the old lifetime allowance regime but took less tax-free cash than the standard calculation assumes, then applying for a TTFAC might leave you with a higher remaining LSA in the future. That’s because it deducts the actual amount of tax-free lump sums taken.

A TTFAC is most likely to be worth investigating if you have taken pension benefits in the past but didn’t maximise your tax-free cash entitlement.

Examples of pension holders who might have a higher LSA under the TTFAC rules include:

• Those who accessed their funds but took less than 25% of the value as a pension commencement lump sum at the time.
• Those who accessed their pension benefits in the four tax years where the lifetime allowance was lower than £1,073,100.

But beware: it doesn’t always help

In some cases, the standard transitional calculation is more generous than a certificate based on actual historic benefits. A TTFAC could therefore leave someone with a lower remaining allowance than they would otherwise have had.

There is also no undo button. If you obtain a certificate and later realise the standard calculation would have given you a bigger allowance, you can’t reverse the decision. 

If you started taking pension benefits before the lifetime allowance came into force on 6 April 2006, and this is your only pension, you cannot apply for a certificate. Your lump sum allowances will be reduced by 25% of the capital value of your pension in payment when you come to access further benefits. If you had a pre commencement pension in payment and took further benefits in the period between 6 April 2006 and 5 April 2024, you can apply, but the calculation will assume you took 25% tax-free cash at the time (rather than what you actually took), regardless of whether you apply for a TTFAC or not.

Timing is also crucial

If you want to rely on a TTFAC, you must apply before your first relevant benefit crystallisation after 5 April 2024. This is usually the first time you take further benefits and examples include taking a pension commencement lump sum, an uncrystallised funds pension lump sum or a stand-alone lump sum. Once that first post-April 2024 event has happened, the opportunity to obtain a certificate is lost.

This means anyone considering a TTFAC should compare their remaining allowance under both methods before making an application or the first new crystallisation event.

Before you act, it’s worth checking three things:

• Whether you took benefits before 6 April 2024,
• Whether your actual tax-free cash was lower than the standard calculation assumption, and
• Whether you can evidence every relevant payment.

You should also consider regulated financial advice, as a TTFAC can reduce rather than increase your remaining allowance, or your circumstances might mean it isn’t worth applying for one. You’ll have to pay a fee for advice, but a personal recommendation can help you avoid any costly mistakes.