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Higher tax free lump sums

Depending on which PCSPS(NI) arrangement you are a member of you are either entitled to an automatic lump sum or the option to give up part of your pension for an optional lump sum. These lump sums are tax free and subject to HMRC limits.
Members taking their pension on or after 1 October 2007 will be given the option of taking a higher tax free lump sum (HTFLS).

Lump sums currently available

classic

You are entitled to an automatic tax free lump sum based on 3 x your annual pension. This lump sum will be reduced if you are still contributing to provide benefits for your widow, widower or civil partner, or for incapacitated children you have nominated during service.

classic plus

  • You are entitled to an automatic tax free lump sum based on 3 x your annual pension as in classic for your service before 1st October 2002; plus
  • You can give up part of your pension for an optional tax free lump sum as in premium for your service from 1st October 2002. Your pension will be reduced by £1 a year for every £12 you take as lump sum.

premium

You can give up part of your pension for an optional tax free lump sum. The HMRC limits the amount of lump sum you can take (typically up to 2¼ times your pension). Your pension will be reduced by £1 a year for every £12 you take as lump sum.

nuvos (new scheme)

You can give up part of your pension for an optional tax free lump sum. The HMRC limits the amount of lump sum. Currently the limit is 25% of the total notional value of your pension benefits and the formula for working out the maximum amount of tax-free cash in nuvos is pension x 30/7. Your pension will be reduced by £1 a year for every £12 you take as a lump sum.

HTFLS from 1 October 2007

The maximum lump sum you can take will be increased from 1 October 2007. We have produced a calculator which shows the maximum lump sum for a given amount of pension and the effect that taking a lump sum would have on your remaining pension, for those taking their pension from 1 October 2007 onward.
Lump sum calculator
The calculator is in Microsoft Excel, if you do not have MS Excel you can download a MS Excel viewer from here: Download viewer.

Find out more

For further information, check the age retirement section for your arrangement.
If you would like more information on HTFLS at retirement please read the following booklets or leaflets listed below:
An information leaflet/booklet will be available for the nuvos scheme shortly.