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Exchange pension for lump sum

You can exchange some of your annual pension to provide a lump sum.

You can exchange as much or as little as you like provided that you do not exceed the permitted limit. This can be up to 25% of the capital value of your pension. You would receive £12 as a lump sum for each £1 of pension that you give up. For example, if you were entitled to a pension of £16,000 and gave up £2,000, you would receive an annual pension of £14,000 and a lump sum of £24,000.

Kent Police will ask you at the time of your retirement to indicate if you wish to commute part of your pension for a lump sum.

Jim's annual pension is £3,000
Jim decides to give up £750 pension for a cash lump sum, then:-

His reduced annual pension is:       £3,000 less £750   = £2,250
He will get a tax free lump sum of:  £750 x 12                = £9,000