Question on Cash Lump Sum (UFPLS) pension form

pmq

My wife is going to be drawing a small cash lump sum from a pension policy.

On the forms supplied there is a question about whether "total retirement savings are greater than £500,000" but it goes on to qualify the £500,000 in a variety of ways such as: 

 - not to include (in the test against £500,000) any retirement savings you are not taking until a later date.

 - include the annual amount of any pensions in payment, before the deduction of tax, multiplied by 25

Then if the retirement savings (that are to be included in the total) exceed £500,000 an additional section about other retirement savings needs to be completed.

She can answer the question OK. But we were just wondering what the significance of the £500,000 test is in this case. Such as what is special about taking £500,000 now (or in the past).

Any ideas?

DairyQueen

Seems odd. AFAIK there is no regulatory significance about 500k. I wonder if this has something to so with the scheme's alerts on checking LTA?

pmq

Thanks for the reply.
I've googled extensively looking for anything that mentions £500k in a regulatory context and completely drawn a blank. Loads of examples of people drawing £500k etc. But nothing about any limit or test relevant to £500k. Hence the question.