Integrated circuit packaging system with conductive pillars and method of manufacture thereof

A method of manufacture of an integrated circuit packaging system comprising:

• providing a substrate;
• forming a conductive pillar, having substantially parallel vertical sides, in direct contact with the substrate including forming a passivation layer having a via, above the substrate;
• filling the via of the passivation layer with the conductive pillar;
• removing the passivation layer;
• mounting an integrated circuit to the substrate beside the conductive pillar;
• and
• encapsulating the integrated circuit with an encapsulation having a top surface formed for the conductive pillar to extend beyond, including forming the encapsulation around the conductive pillar and leaving side portions of the conductive pillar exposed above the top surface of the encapsulation.