Your pension commencement lump sum options

When you first choose to access your Police pension, you'll have a number of options around what's known as your 'pension commencement lump sum' - a single payment (which is usually paid free of income tax) which represents a portion of your overall pension fund.

The three different Police schemes take varying approaches to pension lump sums so it's worth familiarising yourself with the options available in the scheme (or schemes) where your pension rights are held.

Police Pension Scheme 1987

The Police Pension Scheme 1987 allows you exchange part of the value of your pension permanently, for a lump sum. The exact amount you will 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 Actuary's 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 lump sums) and;
  • a tax-free lump sum limited to 25% of your pension's value.

This will help you to make an informed decision on your favoured balance between annual pension and lump sum.

To estimate your annual pension and lump sum at any time, you can also use our pension calculator.

New Police Pension Scheme 2006

The New Police Pension Scheme 2006 scheme provides its members with an automatic tax-free lump sum of four times their annual pension amount. However, you are permitted to exchange some, or all, of that lump sum for an increased annual pension.

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.

To estimate your annual pension and lump sum at any time, you can also use our pension calculator.

Please note if you choose to exchange your lump sum for annual pension it will only affect your personal pension - survivor's and dependents' pensions cannot be increased in this way.

The Police Pension Scheme 2015

Members of the Police Pension Scheme 2015 scheme have the option to commute up to a maximum of 35.7% of the value of their pension to receive their tax-free lump sum. If you opt to commute part of your annual pension for a one-off lump sum at retirement, you’ll receive £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.

To estimate your annual pension and lump sum at any time, you can also use our pension calculator.

Was this information useful?
1 + 10 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.