Firefighters RDS modified scheme
If, on retirement, you prefer to have a lump sum as well as a pension you can provide one by “commutation”. To do this you must give written notice to the fire and rescue authority, no earlier than 4 months before your intended retirement and no later than the day before your pension is due to come into payment. You would state how much of your pension (including any Additional Pension Benefit) should be commuted, i.e. converted into a lump sum. (Note that you may not commute any portion of a higher tier ill-health pension.)
For special firefighter members, the amount of lump sum provided by each £1 of pension commuted is determined by factors provided by the Scheme Actuary, they reflect those that applied to members of the FPS 1992 as at 1 April 2014. (These are greater than apply to standard FPS 2006 members.)
You can commute up to one quarter of your pension provided that the resultant lump sum would not be greater than the maximum permitted by HM Revenue and Customs without incurring a tax charge ("a scheme chargeable payment"). This limit is most likely to be exceeded if the relevant commutation factor is greater than 20. When your pension becomes due, the authority's pensions administrator will be able to tell you how much you can commute, if restricted by the tax limits.
Assume a special firefighter member is entitled to a pension of £8,000 and is aged 57 years and 7 completed months on the day his pension commences; the relevant commutation factor shown below is 19.8. He opts to commute one quarter of his pension for a lump sum. Based on £8,000, this would be £2,000.
The lump sum will be: £2,000.00 x 19.8 = £39,600.00
The pension following commutation will be: £8,000.00 - £2,000.00 = £6,000.00
|Commutation Factors (at date of issue of this Guide) Based on age in years and completed months on day pension commences|