Can I Exchange Pension for Cash?
In most cases, on retirement, it is possible for you to give up part of your Standard Section pension for a tax free cash lump sum.
The amount of the lump sum you can take is dependent upon the level of your pension and your age at retirement. The maximum amount of tax free cash allowable is calculated in line with a formula prescribed by HM Revenue & Customs. In some circumstances, the amount may be restricted to ensure that a minimum level of pension is paid - you will be notified if this applies to you.
Taking a lump sum reduces your pension. The amount of the reduction depends on your age at retirement, and the value of the lump sum itself.
At the time of your retirement, you may elect to take any amount of lump sum between zero and the maximum allowed at that time.
If you exchange pension for a lump sum it does not affect the amount of pension payable to your Widow/Widower/Civil Partner.
If you have made contributions to the Defined Contribution Section, when you retire you will have various options as to how to use the funds in your Member Account, including the option to take part of your Member Account as cash. See Excess defined contributions (including TUCs).
You may wish to take Independent Financial Advice before deciding what option is best for you.