Income tax on pension scheme lump sums

This is the second of three articles dealing with the three new registered pension scheme output allowances introduced by FA 2024 Sch 9 and related statutory instruments (SIs) which have altered the landscape in this area. I recommend reading my first article before this one. Note that two further SIs will soon be issued.

Flexi-access drawdown

It was George Osborne who in 2015 introduced ‘pension freedoms’ for defined contribution pensions. These allowed pension members to access as much of their pension savings as they wanted. Flexi-access drawdown was introduced and there were no limits on how much or how little a pension member could take from their drawdown fund each year. Existing ‘capped drawdown plans’ could continue but no new ones could then be set up. It was at this time that the concept of an uncrystallised funds pension lump sum (UFPLS) also came into being. This...