What is a UFPLS and how does it work with a SIPP?
Reviewed by, Charlene Young
26 May 2026
7 minute read time
- An uncrystallised funds pension lump sum (UFPLS) lets you withdraw money from your pension without entering drawdown or buying an annuity, with 25% of each withdrawal tax-free and 75% taxable
- Taking a UFPLS payment triggers the money purchase annual allowance (MPAA), reducing your annual allowance for some types of pension in the future
- You must be at least 55 years old (rising to 57 from 2028) to take a UFPLS, and your pension scheme must allow this withdrawal method
- The lump sum allowance (LSA) caps the tax-free portion of UFPLS withdrawals at £268,275 over your lifetime
UFPLS meaning
UFPLS stands for ‘uncrystallised funds pension lump sum’, and it’s one of the flexible ways you can take money from your pension once you reach the minimum pension age. UFPLS essentially refers to taking ad-hoc lump sums directly from your pension pot and keeping the rest invested without needing to move your funds into drawdown first.
How does UFPLS work with a SIPP?
When you take a UFPLS payment, it’s a single withdrawal, but for tax purposes 25% is tax-free (subject to your available lump sum allowance), while the remaining 75% is taxed as income in that tax year.
UFPLS differs from other pension access methods because you’re taking both tax-free and taxable amounts in one lump sum, rather than separating them.
For example, if you withdraw £10,000 as a UFPLS, £10,000 would leave your pension pot; £2,500 would be tax-free, and £7,500 would be taxed at your marginal income tax rate, which depends on your total income.
It’s worth noting that your pension provider will typically have to apply an emergency tax code to the taxable portion on your first withdrawal, though you can reclaim any overpaid tax from HMRC afterwards.
UFPLS payments are an attractive choice for those who want occasional access to pension funds rather than setting up a regular income. You can take UFPLS payments from a Self-invested personal pension (SIPP) whenever you need them, for whatever amount you require, as long as your provider supports this option and your pension scheme rules permit it.
Learn more about taking lump sums from your pension.
Who is eligible for a UFPLS payment?
Not everyone can take a UFPLS payment from their pension, so it’s important to check whether you meet the eligibility criteria. Generally, you must be at least 55 years old (rising to 57 from 2028) to access your pension using UFPLS. However, some pensions don’t allow UFPLS withdrawals at all, so you’ll need to verify that your specific pension scheme permits this type of payment.
A UFPLS must also be taken from uncrystallised funds, which means money that hasn’t already been accessed or moved into a drawdown.
UFPLS for AJ Bell customers
If you have a SIPP with AJ Bell, you can take UFPLS payments provided you meet the age requirement and have uncrystallised funds available. You also need to ensure you haven’t exceeded your lump sum allowance. Additionally, if you have protected tax-free cash amounts from before April 2024, special rules may apply to your situation.
Key considerations before taking a UFPLS payment
Before taking a UFPLS payment, these considerations will help you make informed decisions about accessing your pension and avoid unexpected tax bills or restrictions on future pension contributions.
Age
The minimum age at which you can access your pension through UFPLS is currently 55, though this is scheduled to increase to 57 from 6 April 2028. This age limit applies to most people, but there are exceptions for those with protected lower pension ages or if you’re taking your pension early due to ill health.
It’s worth considering whether taking your pension at the earliest opportunity is the right move for you. Taking UFPLS payments before you genuinely need the money could result in unnecessary tax charges and reduce the amount of time your pension lasts in retirement. Many people find it beneficial to delay accessing their pension until they need to, particularly if they’re still working and earning a salary that already uses up their personal allowance and basic rate tax band.
Lump sum allowance (LSA)
The Lump sum allowance (LSA) is currently set at £268,275, which represents the maximum amount of tax-free cash you can take from all your pensions throughout your lifetime. Each time you take a UFPLS payment, the 25% tax-free portion counts towards this allowance.
If you had protections in place under the old lifetime allowance regime, you may have different personal allowances.
Keeping track of how much of your LSA you’ve used is crucial. Once you’ve exhausted it, any further pension withdrawals – including the normally tax-free 25% portion of UFPLS payments – will be taxed as income.
How UFPLS payments are taxed and the tax implications
Understanding how UFPLS payments are taxed can help you avoid nasty surprises. As mentioned, 25% of each UFPLS withdrawal is tax-free (up to your available LSA), whilst the remaining 75% is added to your income for that tax year. This taxable portion could push you into a higher tax bracket if you’re not careful about the amounts you withdraw.
For instance, if you’re still working and earning £40,000 per year, taking a £20,000 UFPLS would add £15,000 (the 75% taxable portion) to your income, potentially pushing some of your earnings into the higher rate tax band.
Your pension provider will typically apply an emergency tax code to the first UFPLS payment, which often results in too much tax being deducted initially. You can reclaim this overpayment from HMRC, but it’s a quirk in the tax system that catches many people off guard. Planning your withdrawals carefully and potentially spreading them across tax years can help minimise your tax liability.
Pension scheme rules
Not all workplace pensions or personal pensions allow UFPLS withdrawals, so you’ll need to check with your provider. If you have multiple pension pots, you might find that some allow UFPLS whilst others don’t. In this case, you might consider transferring pensions into a SIPP that does support UFPLS, though you should always consider the implications of transferring, including potential loss of guarantees or valuable benefits.
UFPLS comparison
Learn more about the differences between UFPLS, flexi-access drawdown, pension annuity, and tax-free lump sums.
| Feature | UFPLS | PCLS (tax-free lump sum) | Flexi-access drawdown | Annuity |
|---|---|---|---|---|
| What is it? | Lump sum withdrawals directly from your pension | A one-off tax-free lump sum when accessing pension | Move funds into drawdown, then withdraw income flexibly | Move funds into drawdown, then withdraw income flexibly |
| Accessing money | Take ad-hoc lump sums | Taken upfront when you crystallise funds | Take regular or ad-hoc income after setup | Receive fixed regular payments (e.g. monthly) |
| Tax-free element | 25% of each withdrawal | 100% tax-free (up to 25% of pension) | All withdrawals above PCLS are taxable | All withdrawals above PCLS are taxable |
| Taxable element | 75% of each withdrawal taxed as income | None – income to be provided by drawdown or annuity | All withdrawals above PCLS are taxable | All annuity payments taxed as income |
| Flexible option? | Yes | Medium – you don’t have to take all PCLS at once | Yes | No – once set up cannot be varied |
| Income certainty | None | N/A | None | Guaranteed for life |
| Investment risk | Yes (remaining pot stays invested) | N/A | Yes (funds remain invested) | No investment risk |
| Control over tax planning | High (can phase withdrawals) | N/A | High (can phase withdrawals) | Low |
| When is it used? | For occasional lump sums | At point of accessing pension | For flexible retirement income | For secure, predictable income |
What are the advantages of a UFPLS?
- Flexibility: You’re not locked into any particular income pattern or structure. This approach works particularly well if you’re still working part-time after 55 and only need occasional top-ups to your income. Research shows that the average full lump sum withdrawal through UFPLS is around £15,000, suggesting many people use this method for specific purchases or expenses rather than regular income. Each UFPLS payment stands alone, so you can take one now and another in six months if needed.
- Tax planning potential: By spreading withdrawals across tax years, you might avoid pushing yourself into a higher tax bracket. For instance, taking £20,000 in one tax year means £5,000 is tax-free and £15,000 is taxed. If you took £10,000 in March and another £10,000 in April, you’d split the taxable portion across two tax years, potentially reducing your overall tax bill.
- Simplicity: Your remaining pension funds stay invested within your SIPP, continuing to benefit from potential growth. For those with a self-employed pension fund, this flexibility can be invaluable when income from your business fluctuates.
What is the MPAA and how is it affected by taking UFPLS?
The money purchase annual allowance (MPAA) is a reduced limit on how much you can pay into certain types of pension once you’ve taken a flexible payment from your pension savings. Taking your first UFPLS payment triggers the MPAA immediately and it cannot be undone.
Before triggering the MPAA, you can normally contribute up to £60,000 per year to your pensions (or 100% of your earnings if lower) and receive tax relief. Once the MPAA is triggered, this drops dramatically to just £10,000 per year for certain pensions. The MPAA applies to money purchase schemes, which includes SIPPs and most workplace pensions. It doesn’t affect defined benefit pension schemes. What surprises many savers is that taking a £5,000 UFPLS triggers exactly the same MPAA restriction as taking £50,000. There’s no proportional reduction – it’s an all-or-nothing situation.
This matters enormously if you’re still working and contributing to your pension. Consider someone aged 56 who takes a £10,000 UFPLS to replace their car. If they’re earning £80,000 annually and were planning to make a £20,000 pension contribution later that year, they’ll find they can now only contribute £10,000 with tax relief. The MPAA has just cost them £10,000 in potential pension contributions. Many people accidentally trigger the MPAA by taking UFPLS payments without realising the long-term impact on their pension saving capacity.
Frequently asked questions about UFPLS payments
Yes, you can continue making pension contributions after taking a UFPLS, but your annual allowance will be significantly reduced. Taking a UFPLS payment triggers the money purchase annual allowance (MPAA), which reduces your annual pension contribution limit to just £10,000. You can read more about the MPAA in the above section.
After taking a lump sum through UFPLS, the remainder of your pension stays exactly where it is within your SIPP, continuing to be invested according to your chosen investment strategy. Your funds remain in your AJ Bell account and can keep benefiting from potential investment growth.
You maintain full control over these remaining funds and can take additional UFPLS payments whenever you need them, subject to minimum withdrawal amounts set by your provider. You can also change your investment choices or choose to move the remaining funds into a different withdrawal option at any point. The flexibility is yours.
The difference between crystallised and uncrystallised funds comes down to whether you’ve started using your pension.
- Uncrystallised funds are pension savings you haven’t touched yet: They remain invested in your pension pot, and no tax has been triggered because you haven’t taken any money out.
- Crystallised funds are pension savings you’ve started to access: This happens when you take benefits – such as moving money into drawdown, buying an annuity, or taking your tax-free lump sum. At this point, the funds are designated for providing income, and future withdrawals are usually taxable.
Get your money working for you
Options at retirement
Whether you’re nearing retirement or already there, we’re here to help you enjoy your golden years.
Learn more about retirement
How to make your pension last as long as you do – from getting your retirement pot ready, to when and how you can access it.
Investment pathways in retirement
Make managing your pension pot easier in drawdown.
Disclaimer: Remember that the value of investments can change, and you could lose money as well as make it. We don't offer advice, so it's important you understand the risks. If you're not sure, please speak to a financial adviser. These articles are for information purposes only and are not a personal recommendation or advice. Tax treatment depends on your individual circumstances and rules may change. Pension rules apply.