A member of the classic section of the PCSPS(NI) who is about to be paid a pension and lump sum can give up part (or all) of the lump sum in exchange for an increase in their pension.

Scheme administrators should ensure that members using the inverse commutation option meet the eligibility requirements for doing so which are set out in the scheme rules.

Members exercising the inverse commutation option can do so in two different ways. The member can:

1. give up part (or all) of their lump sum and increase their pension only. The widow or widower's pension remains unchanged; or
2. give up part (or all) of their lump sum and increase both their pension and the pension that would be payable to their widow or widower.

If a member chooses to give up part (or all) of their lump sum as described in (2), this provides an increased widow or widower's pension for the person to whom the member is married on the day before the member's pension benefits become payable. It does not increase any children's pension or adult dependant's pension. The member cannot take this option if they are not married. If the member marries again after exercising the option, the amount of pension which would then be payable to their new partner in event of the member's death is not increased.

The member must give up their lump sum in multiples of £100 unless they are giving up all of it.

Members cannot opt to increase only the widow's/widower's pension.

The increase in the member's pension for each £100 of lump sum given up (or amount surrendered) should be determined as follows:

Increase in member's pension = Amount surrendered x (Factor / 100)

Where:

Amount surrendered is the cash lump sum that is being exchanged for annual pension at the calculation date.

Factor is based on the member's actual age (complete years and months, ignoring part months) at the calculation date. The factor is taken from table P1IC1 and is expressed as an amount of annual pension to be awarded for every £100 of lump sum surrendered. The factor should be chosen from the appropriate column in the table, depending on if the member is exchanging for member only pension or member and widow/widower's pension. When the member dies and member and widow/widower's pension is exchanged for, half of the increase to the member's pension is payable to the widow/widower.

There are scenarios defined in the scheme rules (unauthorised lump sum payment and conversion of retirement lump sum for a pension credit member) where the member can only surrender the lump sum in exchange for an increase to the member's pension.