Taking a lump sum
When you retire, you can take part of your pension as a lump sum.
This is normally paid tax free.
- If you were a member of the scheme before 1 April 2008 you are automatically provided with a lump sum
- If you joined after 1 April 2008 the scheme no longer provides an automatic lump sum, but you can give up some of your pension for a lump sum
If you want to take a lump sum or increase the size of your lump sum you have to give up £1 of pension to earn lump sum of £12.
Example
When Jane retires, she has built up the following benefits:
- pension of £6,667 a year
If Jane wants to take a £20,000 lump sum, she will need to give up £1,667 of her pension.
To work out what this means for her pension, we take Jane's desired lump sum and divide by 12. This is the amount of pension she will need to give up.
Her new benefits will be:
- pension of £5,000 a year
- a lump sum of £20,004
Please note, you must tell us if you want to give up pension for lump sum before you retire.
