Pension and lump sum
At a glance
When you retire, you can choose to exchange some of your pension for a lump sum which is usually paid tax free. This is known as commutation. Every £1 of pension you give up will get you a lump sum of £12.
You are in the
2015 scheme
The right choice for you
At retirement
If you would like to exchange some of your pension as a lump sum, you will need to let your pension administrator know before your retirement date.
NPCC Pension Podcast - Episode 3
You can find out more about lump sums in the podcast episode.
Example - Lump sum
Emma’s pension (before lump sum) was £16,100 a year.
Some of the options that Emma can take are:
| Full pension, no lump sum | Maximum lump sum, lowest pension | |
|---|---|---|
| Pension each year | £16,100 | £10,350 |
| Lump sum | £0.00 | £69,000 |
You could also select to take a smaller lump sum than the maximum, but bigger than £0.00. If you did this your pension would also be adjusted accordingly.
Calculate your lump sum
Lump sum
Comparing pension and lump sum
Use the mini calculator to see how much pension and lump sum you could get.
*The government sets some limits on the amount of lump sum you can take without incurring a tax charge. This is either 25% of the capital value of your pension, or the lump sum allowance.
How much you can take
Limits on the amount of lump sum
The government sets some limits on the amount of lump sum you can take without incurring a tax charge. This is either 25% of the capital value of your pension, or the lump sum allowance.
Find out more in the lump sum allowance section.
Under £30,000
Small pensions
If, when you get to retirement, the value of your pension from the police pension scheme as well as any other pension schemes is no more than £30,000 you can apply to take it as a lump sum. This is known as trivial commutation.