Skip to Main Content

Can I receive my deferred pension as a one-off lump sum?

If the pension payable to you from the Local Government Pension Scheme (NI) is within the HMRC limits it may be commuted and paid as a one-off lump sum instead of an ongoing pension.

Changes to the Finance Act 2004 have increased these limits from 27 March 2014.  From this date members whose total capital value of pension rights in all schemes are less than £30,000 may trivially commute their pension rights.

To check that your benefits are within the limits laid down by HMRC, NILGOSC will require the following details:  

  •  The value of all pension rights you have accrued that are not yet in payment.
  •  The value of all pensions commuted to a lump sum on or after 6 April 2006.  

An entitlement to a pension following death e.g. a spouse’s, civil partner’s or dependant’s pension, state pension and state pension credit are not measured against the limit.

It should be noted that;

  •  a pension can only be commuted after the age of 55 (or 65 for male members and 60 for female members who have a GMP payable).
  •  the commuted pension can only be paid when your lifetime allowance is available and your total crystallised amount, from all pensions, does not exceed £30,000.  
  •  the commutation payment extinguishes all member’s rights to benefits e.g. no dependants’ benefits would be payable in the event of your death.

Members who left the Scheme after 1 April 2009 and whose capital value of pension rights in the Scheme is less than £10,000 may also trivially commute their pension rights.