Pension Commencement Lump Sum (PCLS)

What is PCLS?

PCLS, which is often known as ‘tax free cash’ or a ‘tax free lump sum’, is a tax free payment which most people can receive when they start accessing their pension benefits. It is normally 25% of the value of the pension benefits being accessed.

The lifetime allowance was abolished on 6 April 2024. In its place, two new allowances were introduced:

  • Lump Sum Allowance (LSA): This limits the amount most people can take as a tax-free lump sum during their lifetime.
  • Lump Sum and Death Benefit Allowance (LSDBA): This limits the amount which can be taken as a tax-free lump sum during lifetime or following death before age 75.

Uncrystallised funds

Uncrystallised is the term used to describe pension funds which have not yet been accessed. PCLS is only available from uncrystallised funds.



 

Crystallised funds

Crystallised funds are those which have been assigned to provide pension benefits. The term ‘crystallise your pension benefits’ would be synonymous with ‘access your pension benefits’.