How much will you get?
In this section
he firefighters’ pension scheme 2006 (special) is a final salary pension scheme.
Are you building up benefits elsewhere?
This section gives you details about your firefighters’ pension scheme 2006 (special) pension. If you also have benefits in the firefighters’ pension scheme 2015, you should read about how much you could also receive from that section.
How much will you get?
Your pension value
The firefighters’ pension scheme 2006 (special) is a final salary pension scheme, which means the amount you get in retirement is based on:
- how long you were a member;
- your final pensionable pay when you leave; and
- an accrual rate (1/45).
Annual benefit statement
Review your figures
Each year your administrator will let you know the value of your pension in your annual benefit statement, or for those members affected by age discrimination remedy, your annual benefit statement and remedial service statement (ABS RSS).
Find out more about your ABS RSS.
Calculating your pension
How it is worked out
Your pension is calculated using the following formula:
Your pension is calculated using the following formula:
Annual pension =
Pensionable
service
Final
pensionable pay
1/45
(accrual rate)
Example
2006 (special) pension
Retirement age: 55
Pensionable service: 15 years
Final pensionable pay: £32,000
15 x £32,000 x 1/45 = £10,666.67 a year
Lump sum
Commutation
You can give up part of your pension for a tax free, cash lump sum. This is known as ‘commuting your pension’ or commutation.
Process:
- 01.
Let your administrator know that you want to give up part of your pension to take a lump sum, no earlier than four months before your retirement and before your first pension payment is made.
- 02.
Choose how much of your pension you would like to give up for lump sum.
- 03.
Your administrator/fire and rescue authority will arrange for the lump sum payment to be made as soon as possible after your retirement date.
- 04.
Your remaining pension will be paid on the next available payroll. Your administrator should let you know when this will be.
Note: higher tier ill health pensions cannot be exchanged for a lump sum.
Cash lump sum calculations
The amount of lump sum you get when you exchange your pension depends upon your age and a commutation factor.
Commutation factors are set by the Government Actuary’s Department and are based on the age you take your pension. A full list of commutation factors is shown below on this page.
Example
Commutation
- Age at retirement: 57 years and 7 months
- Annual pension: £8,000 a year (before the lump sum is taken)
- Lump selected: one quarter of annual pension (the maximum allowed)
- Commutation factor: 19.8
The options would be:
Pension only
Pension each year: £8,000
Cash lump sum at retirement: £0
OR
Pension and lump sum
Pension each year: £6,000
Cash lump sum at retirement: £36,000
In this example, the lump sum is calculated as follows:
One quarter of £8,000 = £2,000 (to be exchanged for a lump sum)
£2,000 x 19.8 (commutation factor) = £39,600
You can also choose to give up less pension to receive a smaller lump sum.
Tax
HM Revenue and Customs limit the amount of lump sum you can take before receiving a tax charge. This is known as the lump sum allowance – your administrator will let you know more about this if you are affected and you can also find out more in the tax section.
Small pensions
Trivial commutation
If the value of your pension from all your pension arrangements is less than £30,000, you may be able to take it as a lump sum. This is known as trivial commutation.
In the calculations for trivial commutation, to work out the value of your pension in the firefighters’ pension scheme 2006 (special), you would multiply the annual pension by 20.
Example
Trivial commutation
Annual pension = £1,200 a year
Value for trivial commutation = £1,200 x 20 = £24,000
In this example the member would be able to look into taking their pension as a lump sum.