Flexible lump sums

These are lump sums you can take to cash in your whole pension pot – or just some of it, leaving the rest invested.

Some people call these ‘flumps’… and HMRC calls them ‘uncrystallised funds pension lump sums’ (or UFPLS). This term is meant to highlight that the lump sum still needs to be taxed… but we’ll stick with ‘flexible lump sum’.

  • 25% of a flexible lump sum comes tax free, with the other 75% taxed at the highest rate you pay.
  • With The People’s Pension, if you have over £10,000 in your pension pot, you may be able to take flexible lump sums. (If your pension pot is £10,000 or less, check out Small pot lump sums.)
  • You’re allowed 1 payment each tax month and it has to be at least £2,000. Then each time you take another one, you need to still have over £10,000 in your pot on the date we process your claim.

Here’s an example of a tax calculation:

Say you take £30,000 as a flexible lump sum.

  • If HMRC has not supplied us with your tax code for the current tax year, your flexible lump sum will be taxed using a temporary (emergency) rate. In most cases this will mean that too much tax will be deducted and you’ll have to reclaim the overpayment from HMRC.
  • £22,500 is taxable, meaning you’d pay £8,399.61 in tax.
  • So, you’d get £21,600.39.

There’s also a range of rules and tax concerns you need to think about, so make sure you do your research.

More about your different options for taking your pension savings »