How much lump sum can I take?

On retirement you can exchange some of your pension for a cash lump sum, this is known as “commuting your pension” or “commutation”.

To do this you must give written notice to the fire and rescue authority, no earlier than 4 months before your intended retirement and no later than the day before your pension is due to come into payment.

You would need state how much of your pension (including any Additional Pension Benefit) you would like to be commuted, i.e. converted into a lump sum. Note that you may not commute any portion of a higher tier ill-health pension.

For special firefighter members, the amount of lump sum provided by each £1 of pension commuted is determined by factors as shown in the chart below. These are provided by the scheme actuary.

You can commute up to one quarter (25%) of your pension provided that the resulting lump sum would not be greater than the maximum permitted by HM Revenue and Customs without incurring a tax charge ("a scheme chargeable payment"). This limit is most likely to be exceeded if the relevant commutation factor is greater than 20.

When your pension becomes due, the authority's pensions administrator will be able to tell you how much you can commute, if restricted by the tax limits.

Here’s an example of how it works:

A special firefighter is entitled to a pension of £8,000 and is aged 57 years and 7 completed months on the day his pension commences.

The relevant commutation factor is 19.8.

He opts to commute one quarter of his pension for a lump sum (based on £8,000, this would be £2,000)

The lump sum will be: £2,000 x 19.8 = £39,600

The pension following commutation will be: £8,000 - £2,000 = £6,000

So a pension of £6,000 per year and a one off lump sum of £39,600

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