Uncrystallised funds pension lump sum meaning

This Practice Note outlines and critiques the restrictions that arise when advice is provided to an individual who wishes to move from a defined benefit (DB) occupational pension scheme to a manner of defined contribution (DC) arrangement. It concentrates on what amounts to suitable independent advice, identifies which persons are authorised to deliver advice, and explains the Financial Conduct Authority (FCA) requirements placed upon those persons. The need to take advice Since 6 April 2015, members holding safeguarded benefits—broadly, DB entitlements—valued at £30,000 or more must obtain advice from a professional, independent financial adviser (described by the FCA as a Pension Transfer Specialist) if they intend to surrender safeguarded benefits in favour of flexible benefits—broadly, DC entitlements—whether by transferring them to a flexible benefit scheme, converting benefits into flexible benefits, or receiving them as an uncrystallised funds pension lump sum. This duty to seek advice, which this Practice Note terms the ‘appropriate independent advice requirement’, is considered in Practice Note: Requirement for appropriate independent advice on DB to...

From 6 April 2015, members may access ‘flexible benefits’ (defined below) once they reach the normal minimum pension age, without restriction. The requirement to purchase a lifetime annuity has been removed, and individuals can draw on their pension pot via drawdown or by taking one or more uncrystallised funds pension lump sums (UFPLSs). Amounts withdrawn are taxed at the member’s marginal income tax rate, while up to 25% remains available as a tax‑free lump sum. The government introduced these reforms to give members greater control over their finances and to enable them to draw their pensions in the way they choose. For further information, see Practice Note: Pension freedoms—an introduction [Archived]. To ensure members with flexible benefits have enough detail to make informed decisions about accessing their pension pot, from 6 April 2015 changes were made to legislation and to the Financial Conduct Authority (FCA) Handbook rules. These require trustees, managers and providers of occupational and personal pension schemes to supply retiring members with flexible benefits with specific information...

A-day 'A-day' is the widely used term for the broad pension tax 'simplification' reforms that began on 6 April 2006. The changes covered: how much pension contribution was allowed, the kinds of schemes an individual could invest in, the sums that could be taken (and when), and the choices available for any remaining fund. A-day also introduced the annual allowance and the (now abolished) lifetime allowance. See: Annual allowance and Lifetime allowance. AFPS AFPS: Armed forces pension scheme; see Practice Note: Public sector pensions and family proceedings. Accrual rate The speed at which pension benefits build as pensionable service is completed in a final salary scheme, eg 1/60 for each year of pensionable service. Accrued benefits The benefits earned in respect of service up to a specified date. Added years Extra pension provided by adding further years of pensionable service in a salary-related scheme. Such additional years are secured via transfer payments or through additional voluntary contributions/augmentation...