Comparison · 2026/27
Trivial Commutation vs UFPLS for Small Pension Pots
Cashing in a small old pension pot can be done via the small pots (trivial commutation) rule or a standard UFPLS withdrawal — but only one avoids triggering the Money Purchase Annual Allowance. This guide explains the difference and when each applies.
At a Glance
| Feature | Small Pots (Trivial Commutation) | UFPLS |
|---|---|---|
| Pot size limit | £10,000 or less per pot | No limit |
| Number of times usable | Up to 3 personal pots + unlimited occupational pots | Unlimited, in stages |
| Triggers MPAA? | No | Yes — reduces to £10,000 Annual Allowance |
| Tax-free portion | Normally 25% | Normally 25% |
| Best suited to | Small qualifying pots, still contributing to pensions | Larger pots or already used small pots allowance |
Money Purchase Annual Allowance shown is £10,000 for 2026/27; standard Annual Allowance £60,000; Lump Sum Allowance £268,275. Confirm current figures on gov.uk.
How the Small Pots Rule Works
If a whole pension pot is worth £10,000 or less, you can cash it in entirely as a single lump sum, with 25% normally tax-free and the rest taxed as income. Crucially, this route does not count as flexibly accessing your pension, so it does not trigger the Money Purchase Annual Allowance — allowing you to keep contributing up to the full standard Annual Allowance to other pensions afterwards.
You can typically use this rule on up to three personal pension pots over your lifetime, with occupational scheme small pots assessed separately and without the same three-pot limit, making it a valuable tool for consolidating or clearing out several small old workplace pensions.
How UFPLS Works
A UFPLS lets you take money directly from an uncrystallised pension pot of any size, either as a single withdrawal or in several stages over time, with 25% of each payment normally tax-free and the rest taxed as income in the year received. There is no upper limit on the pot size, making it the standard route for accessing larger pension pots flexibly.
The trade-off is that any UFPLS withdrawal, however small, triggers the Money Purchase Annual Allowance, permanently reducing your tax-relieved pension contribution limit to £10,000 a year (2026/27) from that point onwards — a significant consideration for anyone still working and wanting to make substantial pension contributions in the future.