Taking a tax-free lump sum

When you're ready to access your pension, you'll have the option to convert part of your annual pension entitlement into a lump sum. This is known as your 'pension commencement lump sum' and it's a single payment  that's usually paid free of income tax.

The different Firefighters' schemes take different approaches to pension lump sums so you should study your options carefully and, remember, if you do want to take a lump sum, you'll need to formally apply well in advance of the date you intend to retire.

The Firefighters' Pension Scheme 1992

The exact amount you'll be able to receive as a lump sum depends on a number of variables, including your length of service and a range of factors supplied by the Government’s Actuary Department.

In practice, SPPA will provide personalised calculations ahead of your retirement to illustrate:

  • the maximum amount of lump sum you can take (which may incur a tax charge if it exceeds HMRC’s limit for tax-free lumps sums) and;
  • a tax-free lump sum limited to 25% of your pension’s value.

The New Firefighters' Pension Scheme 2006

You'll have the option to commute up to a maximum of 25% of the value of your pension to receive a tax-free lump sum, receiving £12 of lump sum for every £1 of annual pension you give up.

A personal illustration can be provided by SPPA ahead of the date you intend to retire. Allowing you to make an informed decision on your personal balance between annual pension and lump sum.

The Firefighters' Pension Scheme 2015

You'll be able to exchange up to a maximum of 25% of the value of your annual pension for a tax-free lump sum, receiving £12 of lump sum for every £1 of annual pension you give up.

A personal illustration can be provided by SPPA ahead of the date you intend to retire. Allowing you to make an informed decision on your personal balance between annual pension and lump sum.

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