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Uncrystallised Funds Pension Lump Sum

Avantegarde
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Uncrystallised Funds Pension Lump Sum

#348789

Postby Avantegarde » October 18th, 2020, 10:16 pm

Does anyone here have personal experience of taking an Uncrystallised Funds Pension Lump Sum (UFPLS) from their DC pension scheme, especially after transferring a pot of money into it from a defined benefits/final salary scheme? Asking for a friend (genuinely). If so, how was it for you? And what would you recommend doing or not doing? And can you point me to the best possible guide to the process? My friend has a terminal illness and would like to get his hands on as much pension cash right now rather than leave a spouse's/dependent's pension to his other half.

swill453
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Re: Uncrystallised Funds Pension Lump Sum

#348797

Postby swill453 » October 18th, 2020, 11:16 pm

You don't need to call it a UFPLS, it's just a crystallization and withdrawal of the whole pension. Just like George Osborne said you could, to buy your Lamborghini if you wish.

25% will be tax free, the rest will be taxed at the appropriate rate.

With my SIPP provider (AJBell) it wouldn't be much more than filling in an online form and ticking a couple of boxes (one of which would be to state you've have basic pension advice).

Scott.

OLTB
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Re: Uncrystallised Funds Pension Lump Sum

#348824

Postby OLTB » October 19th, 2020, 7:24 am

I’m sorry to hear about your friend - if he has a terminal illness and is under 75 then his spouse should get all the money tax free if it’s in a DC pot when he dies. This way he (and his spouse) won’t have to incur a huge tax deduction by taking out the funds now under the UFPLS rules. If he’s over 75 then pension to spouse would be taxable under the normal income tax rules.

Cheers, OLTB.

swill453
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Re: Uncrystallised Funds Pension Lump Sum

#348825

Postby swill453 » October 19th, 2020, 7:36 am

OLTB wrote:I’m sorry to hear about your friend - if he has a terminal illness and is under 75 then his spouse should get all the money tax free if it’s in a DC pot when he dies. This way he (and his spouse) won’t have to incur a huge tax deduction by taking out the funds now under the UFPLS rules. If he’s over 75 then pension to spouse would be taxable under the normal income tax rules.

You're right of course. It looks like I misinterpreted the OP - I got the impression he wanted to avoid the spouse getting hold of the money. This is probably entirely wrong!

Scott.

airbus330
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Re: Uncrystallised Funds Pension Lump Sum

#348892

Postby airbus330 » October 19th, 2020, 11:15 am

I asked this question of Aviva, who hold the bulk of my company DC plan, last week. UFPLS should take about 8 weeks from initial request for an info pack containing retirement options to actual payment. As to be expected, the initial payment will be on Emergency Tax rates, which can be claimed back from HMRC. Once HMRC have agreed your tax code, further payments will be with the correct taxation.
Depending on your friends situation, he could just take his Pre Commencement Lump Sum (the 25% tax free element) to spend, leaving the remainder to pass tax free to the spouse, assuming he is under 75.

Avantegarde
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Re: Uncrystallised Funds Pension Lump Sum

#348964

Postby Avantegarde » October 19th, 2020, 3:14 pm

Thanks for the replies. My friend wants, it appears, to get hold of a lot of his pension cash to spend it now.

swill453
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Re: Uncrystallised Funds Pension Lump Sum

#348966

Postby swill453 » October 19th, 2020, 3:22 pm

Avantegarde wrote:Thanks for the replies. My friend wants, it appears, to get hold of a lot of his pension cash to spend it now.

Hmm, so I was right after all...

He should be able to get all of it at once, less tax on 75% of it. If it's a large amount the tax could be up to 45%.

With my AJBell SIPP it would be a case of filling in a form and ticking the box that says "I want to take a one-off income payment to close my SIPP".

If he gets over-taxed because they use an emergency tax code, he can fill in an online P55 form straight away, and by asserting he will get no more income this year they'll refund the excess tax.

Scott.


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