Under the rules, a small pot lump sum must be £10,000 or less. If it’s over £10,000, you could take a lump sum as an uncrystallised funds pension lump sum or UFPLS. The UFPLS claim pack will make you aware of the difference between this and a small pot lump sum eg a UFPLS will reduce the amount you and your employer can pay into your pension to £10,000 per year (known as the money purchase annual allowance), while taking a small pot lump sum will maintain your £60,000 annual allowance.

Remember that if you take a UFPLS:

• You need to have a minimum pension pot of £10,000 when you take your first lump sum (or £2,000 if you’ve already taken money before)
• each lump sum you take must be a minimum of £2,000 (or the rest of your savings in your pension pot if lower)

Find out more about taking your pension pot all in one go through a small pot lump sum or UFPLS.