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Pension Commencement Lump Sum

What is a PCLS?

For UK pension holders, PCLS is a tax-free payment that is often called ‘tax-free cash’ or ‘tax-free lump sum’. Most people can get a PCLS when they start receiving their pension benefits.

The PCLS is 25% of the value of the pension benefits being accessed. Some people may be able to receive more—for example, if you have applied to HMRC (Her Majesty Customs and Revenue) for one of the protection policies when the lifetime allowance (LTA) has been reduced.

How does a PCLS work?

You will have the choice to receive your funds as PCLS and to use the rest to provide taxable income when you decide to access some of your pension funds.

Do I have to take a PCLS?

Not if you don’t want to. For example, if you wanted to buy an annuity you might decide that you would rather have the greater annuity value using your whole pension, rather than with 75% of your pension

Pension Commencement Lump Sum FAQs

‘Uncrystalized funds’ is the term used for pension funds which have not yet been accessed. PCLS is only available from uncrystalized or unused funds.

‘Crystalized funds’ are funds which have been used against the lifetime allowance and are assigned to provide pension benefits. There is no PCLS available from crystalized funds.

If you reach age 75 with pension funds you haven’t accessed, those funds will turn into unused funds and not uncrystalized funds. Ask your advisor for more details.

In the same way that you don’t normally have to access all of your pension benefits at once, you don’t have to get your PCLS all at once. You can take a PCLS every time you access new pension benefits.

The maximum PCLS you can have in total from all of your pensions is 25% of the lifetime allowance. Rules and restrictions apply so make sure to ask your advisor for more details.

If you have a certain kind of lifetime allowance protection, you may be entitled to more PCLS.

There are different kinds of protection. Most will allow you to take up to 25% of your protected lifetime allowance and not the normal lifetime allowance. Other kinds of protection may entitle you to a higher PCLS while others will give a lower percentage of the amount crystalized.

It’s usually possible to delay taking a PCLS but the law says that you must take it within 12 months of crystalizing your funds. After 12 months, the possibility to do so is lost. Ask you advisor for more details.

What to Expect

At Cross Border Wealth, we offer strategic and tactical asset allocation and provide a range of investment solutions. We cater to your needs and preferences and tailor all our services to your expectations. Wherever in the world you are, we’ve got your back.

Our Approach: How We Partner With Clients

In today’s complex market and regulatory environment, we understand the continued need for innovative investment solutions and implementation expertise.

Holistic Approach to Pension Management

Assist fiduciary committees in better understanding the impact of their decisions on the sponsor’s overall balance sheet.

Risk Management

As liability management becomes a priority for the plan, our liability strategists and proprietary analytics can help plans manage toward end-game solutions.

Financial Markets

GSAM’s global team provides access to expertise across financial markets and instruments.

Regulatory Environment

Our dedicated pension strategists can help plans navigate a changing regulatory environment.

Key Differentiators

Deep bench of expertise

We draw on specialized experts including actuaries, risk managers and strategists. We also engage investment professionals spanning asset classes, including credit and rates teams with, on average, over a decade of experience.1

Strategic insights and knowledge transfer

We address our clients’ key challenges and provide timely insights on a variety of topics relevant to the pension landscape, including real-time viewpoints on market and regulatory changes, liability management perspectives and corporate finance.

Holistic implementation approach

We take a holistic approach to portfolio management and provide tailored investment strategies, with a highly curated investment approach and fiduciary mindset.

Extensive risk management

To directly align our investment process with a client's objectives, we leverage sophisticated analytics and dynamic portfolio monitoring that provide our clients with oversight throughout the investment process.

Our Process


Analyze and

Plan-specific considerations, including:

  • Investment objectives
  • Plan size and funded status
  • Materiality
  • Discount rate methodology
  • Liability sensitivities
  • Derivatives usage


Construct and

Bespoke portfolio solutions through:

  • Custom liability benchmarks
  • Liability-hedging portfolios
  • Capital allocation to external managers, where appropriate


Monitor and

Portfolio solutions, utilizing a proprietary, fully integrated risk management system, including:

  • Liability-hedging program
  • Risk exposures based on evolving market dynamics

Examples of Our Partnership with Clients

Client Description

A large multinational with pension plans in multiple jurisdictions that had taken steps to reduce the overall risk their pension plans posed to the overall organization.

Client Objective

The client was seeking a strategic partner to assist them in developing a more holistic, liability-oriented investment strategy. The client had developed a glide path and had hit a number of funded status triggers, increasing their Liability Driven Investing (LDI) allocation to approximately 60%. The client had several active long-duration fixed income managers and was seeking a completion manager to ensure the total LDI portfolio matched the client’s liability risk exposures.

GSAM Solution

GSAM was hired by the client to serve as an anchor fixed income manager. We maintained a role within the active long-duration roster and completed the LDI portfolio to a customized liability benchmark based on accounting cash flows and discount rate methodology. Since the inception of the mandate, we have served the client as a strategic partner, assisting as they work through various de-risking exercises, rebalancing between the long-duration managers based on desired target allocations, raising cash for benefit payments as needed, and serving as the Outsourced Chief Investment Officer (OCIO) for one of its international pension plans.

Client Description

A leading mobile & telecom multinational with a legacy US pension obligation representing over 50% of the organization’s market capitalization. Prior to mandate, their asset allocation was approximately 60% equities and 40% bonds.

Client Objective

The client had frozen their US pension plan to new entrants and future accruals, and was seeking support as they embarked on a large-scale pension plan restructuring with an increased focus on liability-driven investing. The client needed assistance in developing a more diversified strategic asset allocation for remaining pension plan assets, and structuring a retiree buy-out and a lump sum offer to terminated vested participants.

GSAM Solution

We worked with the client to carve out assets to use in the transaction and ran scenarios to determine the value of held bonds given a tradeoff between (a) maximizing the insurance discount and (b) hedging versus the roll-forward. In addition to managing the annuitized plan pre-transfer, and developing a derivative overlay to mitigate the market risk between the roll-forward index and the amount to be delivered to the insurer, we served as the Outsourced Chief Investment Officer (OCIO) and implemented a modernized LDI program to revamp its growth portfolio.

Client Description

A 401(k) plan looking for a full review of investment options available to its participants. At the time, the plan had approximately $500 million in assets and 19 different investment options.

Client Objective

The client had two main goals:
  1. To ensure they were providing an adequate number of choices across asset classes.
  2. To seek simplification within each asset class.

GSAM Solution

After discussing the goals and objectives with the client’s investment committee, the GSAM team advised the client to replace the growth and value style options in all asset classes with core options. They also recommended that they remove blended options, replace passive core fixed income with an active option, remove intermediate-term and long-term treasury options and move all investments to lower fee share classes. As a result, the client removed nine investment options, added a small cap core strategy, added an actively managed core bond strategy, and moved to lower fee share classes for all investments.

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