The amount of the 1992 Scheme pension that can be commuted is subject to the limits set out in the Regulations. In most cases a quarter of the pension can be commuted. Please refer to the Regulations for full details of the commutation limits applicable to members.

Administrators must ensure that the payment of a lump sum in lieu of pension is compliant with tax rules as well as with the Regulations. The main taxation restriction is that for a lump sum to be authorised under the tax rules it must not exceed 25% of the total value of benefits crystallised (25% HMRC limit). Additionally, where a firefighter's pension savings exceed HMRC's Lifetime Allowance (LTA) (for retirements prior to 6 April 2023) or a firefighter's lump sum benefits exceed their Lump Sum Allowance (LSA) (for retirements on or after 6 April 2023), an additional tax charge may fall due.

Please refer to HMRC guidance for further information.

There are some scenarios where the 25% HMRC limit could potentially be breached.

• A member with a commutation factor above 20 commutes 25% of their pension. This can be avoided by commuting a lower proportion of pension.
• Where a member has opted for Allocation of some of their pension in exchange for extra survivor benefits.

Please refer to HMRC guidance if such cases arise.

For a firefighter retiring on pension directly from firefighter service or a pension credit member, the lump sum payable can be determined as follows:

1992 scheme pension given up × factor

Equivalently, the 1992 scheme pension given up can be determined as follows:

Lump sum payable from 1992 scheme / factor

Where factor is taken from Table 1 for members retiring from active service but from Table 1A for pension credit members. Table 1 allows for the underpin to apply where the factors applying to firefighters in England lead to a higher retirement lump sum as referenced in the Introduction section. (This is relevant for all retirements after 20 May 2014.) There is no allowance for the underpin in Table 1A as the underpin does not apply to pension credit members.

Note that the factor for retirements below age 50 should only be used for retirements in ill health since retirements under other rules are not possible until age 50.

The factor to be used is based on the day that the pension commences for contributing members of the scheme.

The lump sum for a pension credit member is "the actuarial equivalent of the commuted portion of the pension at the later of (a) the day on which the pension sharing order takes effect; and (b) the day on which the pension credit member attains age 60".

For a firefighter retiring with a break between leaving service as an active member of the firefighters' pension scheme and pension commencing, the commutation lump sum should be calculated as in 1992 scheme commutation - retiring from active service or on pension credit above in the following cases:

• If the pension commences at or above age 55; or
• If the pension commences on grounds of ill health before age 55 and attracts full pension increases.

In other cases where the pension commences before age 55 a bespoke calculation, not covered by this guidance, is needed.