You can give up part of your annual pension for a one-off tax free cash lump sum.

You will receive £12 lump sum for each £1 of pension given up and can take up to 25% of the Capital Value of your pension benefits.

If you have elected to pay in-house AVCs, you may take up to 100% of your accumulated AVC fund as a tax free lump sum at the same time as your LGPS pension benefits, provided when added to the LGPS Lump Sum, it does not exceed 25% of the combined Capital Value of your LGPS Benefits and your AVC fund.

If the AVC Fund, exceeds the 25% limit, then you are may receive the proportion which when added to your LGPS Lump Sum equals 25% of the combined Capital Value and the remainder of your AVC fund would be paid as an annuity.

The Capital Value of your pension benefits is calculated as follows:

120 x Annual Pension +

10 x (Lump Sum (if any) +

10 x In house AVC Fund (if any) ÷ 7 = Capital Value

Capital Value x 25% = Maximum Lump Sum


A member retires at normal pension age after 20 years membership with an in-house AVC fund of £10,000.  The maximum lump sum payable would be calculated as follows:

Total Pension = £4,000

Statutory Lump Sum (in respect of pre 1 April 2008 service) = £9,000

In-house AVC fund (commenced before 1 April 2014) = £4,500

Capital Value          £

120 x £4,000 =    480,000

10 x £9,000     =    90,000

10 x £4,500     =    45,000

Total                    615,000 ÷ 7 = £87,857.14

Maximum Lump Sum 25% x £87,857.14 = £21,964.29

The automatic LGPS Lump Sum of £9,000 and in-house AVC fund of £4,500 leave a difference of £8,464.29

Divide by 12 £8,464.29 ÷ 12 = £705.36

To receive the maximum lump sum the pension would be reduced by £705.36 to £3,294.64

The maximum lump sum is £21,964.29