From both sections of the Scheme you are able to take some of your benefits as a retirement lump sum. Members of the 1995 Section must have contributed to the scheme on or after 1 April 2008. This part of the site describes your entitlement and options and provides some examples to show how these are calculated.
Claiming a bigger lump sum does not affect the level of survivor benefits payable to a partner or dependent child.
The maximum lump sum you can take is 25% of your capital value. This is determined by a limit set by Her Majesty’s Revenue and Customs (HMRC) and adopted by the Scheme Regulations. It applies across your entire pension arrangements so your HSC retirement lump sum may be limited to a smaller amount if you have other pension savings.
| 1995 Section |
| You will receive a retirement lump sum which is normally three times your annual pension. You also have the option of receiving a larger retirement lump sum and a smaller annual pension.
You have to give up some of your pension to get more retirement lump sum. You will receive £12 of lump sum for every £1 of pension you give up. Your capital value is determined by the HMRC rules and is calculated by multiplying your reduced pension by 20 and adding your total retirement lump sum. In the majority of cases the maximum lump sum you can take works out as approximately 5.36 times your 1995 section pension. |
| Example A member decides to take a larger retirement lump sum when they retire. They receive £12 of lump sum for each £1 of annual pension given up so they choose to exchange £500 of their annual pension to get an extra £6,000 lump sum, (£500 x £12 = £6,000)The benefits are now: Pension £9,129.48 – £500 = £8,629.48 per year Retirement lump sum £27,388.44 + £6,000 = £33,388.44The maximum lump sum they could take is £21,516 higher than their normal lump sum. They would have to give up £1,793 of their annual pension to get this so the benefits would be:Pension £9,129.48 – £1,793.00 = £7,336.48 per year Retirement lump sum £27,388.44 + £21,516.00 = £48,904.44 |
| 2008 Section |
| There is no basic lump sum entitlement in the 2008 section but you do have the option of receiving a retirement lump sum by giving up a part of your pension.The capital value of your benefits is determined by HMRC rules and is calculated by multiplying the pension you will receive by 20 and adding any retirement lump sum. The maximum lump sum you can take works out as approximately 4.28 times your 2008 section pension.
You have to give up some of your pension to get a retirement lump sum. You will receive £12 of retirement lump sum for every £1 of pension you give up. |
| Example A member decides to take a retirement lump sum when they retire. They receive £12 of lump sum for each £1 of annual pension given up so they exchange £1,500 of their annual pension to get a retirement lump sum of £18,000. (£1,500 x £12 = £18,000)The benefits are now: Pension £12,172.62 – £1,500 = £10,672.62 per year Retirement lump sum = £18,000The maximum lump sum they could take is £52,164.00They would have to give up £4,347.00 of her annual pension to get this so their benefits would be:Pension £12,172.62 – £4,347.00 = £7,825.62 per year Retirement lump sum = £52,164.00 |
A calculator tool is available on this website to help members model the amount of additional lump sum they can claim. You will be able to enter your expected pension and lump sum and look at different scenarios, from giving up £1 pension to the maximum permitted.
Click here for Frequently asked Questions about pension commutation.