When you draw your pension benefits you will have the option to exchange some of your pension for a cash lump sum.
The Avon Pension Fund will provide you with the options to do this before you draw your pension.
If you joined the LGPS before 1 April 2008 then you will automatically get a lump sum amount based on total membership in years x your final pay x 3/80.
However, if you joined before 1 April 2008, you can still exchange some of your pension for a lump sum in addition to the automatic lump sum you will be due.
If you joined the LGPS after 1 April 2008 you will not receive any automatic lump sum but you will be able to give up pension for lump sum when you draw your pension.
For every £1 of pension you exchange you will receive £12 tax free cash lump sum.
You may wish to take financial advice before making your decision to exchange pension for lump sum and it is therefore important that you contact the Avon Pension Fund well in advance of your intended retirement date so that we can provide you with the details.
The maximum amount of pension you can exchange for lump sum is set by HM Revenue and Customs and is 25% of the capital value of your pension benefits, providing the total lump sum does not exceed 25% of the lifetime allowance. For the year 2016/17 this is £250,000 (£1million x 25%).
If you have previously taken payment of (crystallised) pension benefits you will have already used up some of your lifetime allowance, therefore, the maximum tax free cash you can take will be 25% of your remaining lifetime allowance.
You can use the calculator below to provide you with an estimate of how much lump sum you can take, up to the maximum, and how this affects your yearly pension. Please note, the calculator does not take into account in-house AVCs.