Fact sheet - Retirement Lump Sum

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The purpose of this fact sheet is to help you make your choice about the lump sum you want to receive and to complete your retirement application form.

• If you were a member of the Teachers’ Pension Scheme (TPS) before 1 January 2007 you are treated as an existing member of the TPS and will receive an automatic lump sum of 3 times your pension when you retire.
• As an existing member, if you have service on or after 1 January 2007 you can choose to convert part of your pension to increase the value of your automatic lump sum.
• If you joined the TPS for the first time on or after 1 January 2007 you are treated as a new entrant of the TPS and have no automatic entitlement to a lump sum.
• As a new entrant, you can choose to convert part of your pension to receive a lump sum.
• If you are retiring on premature grounds you can only convert the element of pension due from the TPS. The element paid by your employer cannot be converted.

How can I calculate the effect on my pension of changing my lump sum ?

Existing members

• If you are an existing member the maximum additional lump sum you can receive is calculated using the formula:

annual pension x 33
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• You will need to give up £1 of annual pension to increase your lump sum by £12.
• If you do not want to take the maximum additional amount of lump sum but would still like to increase your automatic lump sum you can do calculations on the TP website.
• The following examples may help you. If your automatic lump sum is £30,000 your annual pension will be £10,000. To receive a total lump sum of £40,000 your annual pension will reduce to £9,167. If instead you want to receive a total lump sum of £50,000 then your annual pension will reduce to £8,333.

New entrants

• If you are a new entrant and want to receive a lump sum the maximum amount you can receive is calculated using the formula:

annual pension x 30
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• You will need to give up £1 of annual pension for every £12 received as a lump sum.
• If you do not want to take the maximum additional amount but would still like to have a lump sum, you can do calculations on the TP website.
• The following example may help you. If your annual pension is £25,000, to receive a total lump sum of £40,000 your annual pension will reduce to £21,667. If instead you want to receive a lump sum of £35,000, then your annual pension will reduce to £22,083.

Where there is any difference between the legislation governing the Teachers’ Pension Scheme and the information in this fact sheet the legislation will apply.