Can I give up some of my pension to increase my lump sum?
Your LGPS benefits are made up of:
- A pension that is adjusted to keep up with the cost of living for the rest of your life, and
- The option to exchange part of your pension for a tax free lump sum that is paid when you take your pension benefits
In addition, if you were a member of the LGPS before 1 April 2008 you will also have built up an automatic lump sum.
When you draw your pension you will also be able to take part of your benefits as a tax-free lump sum, if you haven’t built one up as you have only post April 2008 membership, or additional lump sum by giving up some of your pension. An option to take a lump sum has to be made before your benefits are paid.
So that you have plenty of time to make up your mind and seek financial advice if you wish, it is important you contact Staffordshire Pension Fund in advance of your intended retirement date so we can provide you with more details.
Please note: calculations cannot be made, however, until pay details are received from your employer as well as notification from them of your retirement.
Your pension will be reduced in accordance with any election you make to receive a lump sum. Any subsequent pension for your spouse, civil partner, eligible cohabiting partner or eligible children will not be affected if you decide to exchange part of your pension for a lump sum.
For every £1 of annual pension that you give up you will receive an extra £12 of lump sum.
If you know the value of your annual pension and lump sum, which is provided on your annual pension forecast, you can use the national calculator to estimate how much lump sum you can take, up to the maximum, and how this affects your yearly pension.
If you have a guaranteed minimum pension (GMP), you may not reduce your pension to below the level of your GMP.