How much lump sum?
HM Revenue and Customs limits the amount of tax-free lump sum you can take when your pension is paid to you. From 6 April 2024, the maximum lump sum is the lowest of:
- 25% of the capital value of your benefits
- £268,275
- £268,275 less the total lump sums you have already taken.
If you have taken a serious ill health lump sum, a further limit will also apply. The maximum lump sum you can take is £1,073,100 less the serious ill health lump sum and any other pension lump sums you have already taken.
The Lifetime Allowance was removed from 6 April 2024. However, if you hold a valid Lifetime Allowance protection, you may be able to take a lump sum that is larger than £268,275.
If you have a Guaranteed Minimum Pension (GMP) you may not reduce your pension below the level of your GMP. This means that your maximum lump sum may be lower than the limit set by HM Revenue and Customs.
If you have paid Additional Voluntary Contributions (AVCs) you may be able to take some or all of these as tax-free cash when you take your LGPS pension.
Your pension fund will let you know your options when you are taking your pension.
Use the Lump sum calculator to estimate:
- the maximum lump sum you could take
- the reduced pension that you would get with your chosen amount of lump sum.