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Salami Slicing

Salami Slicing

Think of your pension as a long salami – OK think of a £ 100,000 pension pot as being made up of 10 separate pots with £ 10,000 in each pot.

Instead of chopping off 25% of the salami and eating it (sorry, spending it) without giving any of it to the tax man, you can just chop of a slice of the salami (e.g. £ 10,000) and take 25% (£2,500) tax free.

Continuing with the salami theme, if you only eat a small amount of salami instead of a large amount, you may go hungry. In pension terms if you only take £2,500 of income instead of £25,000 you may not have enough cash or income.

Therefore, you can eat the remaining 75% of the pension salami but you will pay tax on this.

There are various ways to cut off your slices of salami and even though they have the same effect they have different names. Some options have many different names to make it even more complicated. These names include:

  • Uffle puffle* – sorry, uncrystallised funds pension lump sum (UFPLS)
  • Partial encashment
  • Phased Retirment

I googled uffle puffle pension and I came across this hilarious article which I had written in 2014 for my friend John Lappin. I will reproduce this as a blog here but you can see the original here www.mindfulmoney.co.uk/mindful-news/watch-out-for-pension-dementors

William Burrows

About the author

William Burrows

Billy Burrows has been involved with retirement options for over 20 years, advising clients on all aspects of pensions and retirement income options.

He divides his time between advising individual clients as Retirement Director at Better Retirement and running Retirement IQ, which publishes guides including the popular ‘You and Your Pension Pot’ and ‘The Retirement Journey’.

He is frequently quoted in the national press and appears on radio, podcasts and videos and writes extensively on retirement income matters.

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