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Document When can I commute my pension and what is the maximum lump sum I can take?

You can commute some of your pension to receive a larger lump sum on retirement providing you were actively contributing to the Scheme on or after 1 April 2008.
 
The maximum lump sum you can take is 25% of your capital value of your pension.
 
Your capital value is calculated by multiplying your annual pension by 20 and adding your total retirement lump sum. It is calculated after commutation has taken place.
 
Please also be aware the maximum lump sum you can take tax free is also restricted to 25% of the Lifetime Allowance (LTA) set by Her Majesty's Revenue and Customs (HMRC). The Lifetime Allowance applies to your entire pension arrangements and also takes into account any pension benefits due to you from other schemes.
 
The current Lifetime Allowance is £1.055 million. Therefore the maximum tax free lump sum that can currently be taken is limited to £263,750, unless you have previously applied for protection from HMRC. If you have been granted protection from HMRC the maximum lump tax free sum you can take will be 25% of your personal Lifetime Allowance.
 
You can approximate your maximum lump sum entitlement using the following:
 
1995 Section – Multiply your annual pension by 5.36
2008 Section – Multiply your annual pension by 4.28
2015 Scheme – Multiply your annual pension by 4.28
 
If you have membership in the 1995 and 2008 Sections which have remained separate, they will be treated separately according to the regulations for each Section. For instance, if you have deferred membership in the 1995 Section which ended before 1 April 2008 and have pension in the 2008 Section you will only have the option to commute your 2008 Section benefits, your 1995 Section benefits will be paid at the standard rate with no option for a larger lump sum.
 
Where you have membership in the 2015 Scheme and 1995 or 2008 Section of the 1995/2008 Scheme a separate decision about commutation can be made, unless you are claiming ill health retirement benefits. Further information can be found in the respective member guides.

You can also use the commutation calculator on our website to estimate the maximum lump sum that is available to you.
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