Teachers' Pensions
Understanding lump sums
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Understanding lump sums

We’re often asked to explain whether members are eligible to receive a lump sum. If you’ve final salary service that includes service before 1 January 2007 you’ll receive an automatic lump sum when you take your final salary benefits.

If you only have final salary service after that date, or have any career average service, you’ll not receive an automatic lump sum when you take your benefits. However, you can choose to give up part of your pension to receive a lump sum. Your pension will be reduced for your lifetime and you must make your decision when completing your application form. For each £1 of pension that you give up you’ll receive £12 of lump sum.

The maximum amount of lump sum that you can receive is 25% of the total value of your benefits, and the lump-sum is tax-free. We’re unable to offer financial advice, but to help you decide how much pension you might want to give up in exchange for a lump sum, please use our calculator.

When making financial decisions that will affect your future it’s always best to seek independent financial advice. You can get information on seeking financial advice from www.unbiased.co.uk and www.moneyadviceservice.org.uk/en.

Last Updated: 29/08/2018 13:36

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