When you draw your pension you may have the option of exchanging part of it for a Cash Lump Sum, which is currently paid free of tax.

You can exchange up to roughly 25% of the value of your pension for a cash lump sum. The actual amount will depend on the factors set by the Trustee after consultation with the Scheme actuary.

These factors for exchanging pension for cash are determined by the Trustee and may be revised from time to time. Your annual pension will be reduced to reflect the amount of cash lump sum you elect to take.

In some circumstances it is not possible to for a Cash Lump Sum to be paid to ensure that the minimum level of pension is paid.

Information about the impact of the changes introduced from 6th April 2024 are available on the HM Revenue & Customs allowances page.