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Calculation of deferred benefits

The calculation of your deferred benefits depends on when you were a member of the LGPS.

Annual pension

Your annual pension is calculated differently for these periods of membership:

Lump sum

For all pension built up after 1 April 2008 there is no automatic lump sum but when you take your deferred benefits you will be given the option to exchange some of your annual pension for a one off tax-free lump sum.

You receive £12 lump sum for each £1 of annual pension given up. You can take up to 25% of the capital value of your pension benefits as a lump sum.

You receive an automatic lump sum based on membership before 1 April 2008. You can also exchange part of your annual pension based on membership before 1 April 2008 for extra lump sum.

Example of converting pension to extra lump sum

John has built up:

  • an annual pension of £6,000, and
  • an automatic lump sum of £750.

He chooses to give up £1,000 of his annual pension for extra lump sum.
£1000 x £12 = £12000 extra lump sum.

John receives:

  • an annual pension of £5000 payable for the rest of his life, and
  • a one-off lump sum of £12750 (£750 +£12,000).

Summary

The table provides a summary of how your deferred benefits are calculated:

Membership period Annual pension Lump sum
From 1 April 2014 For each year in the main section: Annual pensionable pay x 1/49
For each year in the 50/50 section: Annual pensionable pay x 1/98
Can exchange £1 pension for £12 tax free lump sum,
up to 25% of the capital value of your pension.
Between 1 April 2008 and
31 March 2014
Membership x Final salary pensionable pay x 1/60 Can exchange £1 pension for £12 tax free lump sum,
up to 25% of the capital value of your pension.
Before 1 April 2008 Membership x Final salary pensionable pay x 1/80  Automatic lump sum:
Membership x Final salary pensionable pay x 3/80

Can exchange £1 pension for £12 tax free lump sum,
up to 25% of the capital value of your pension