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. However, an ordinary pension in respect of at least 25 but less than 30 years of service (unless the member retires at, or after, age 55) or an eligible pension credit can be commuted to give a maximum lump sum of no more than two and a quarter times the full amount of the annual pension. 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 from Table 1

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

Lump sum payable from 1992 scheme / factor from Table 1

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 at the normal benefit age". Normal benefit age is age 60. GAD's understanding is, therefore, that the factor for 60 years 0 months should be used for all pension credit members. Authorities may wish to take legal advice on this point.

For a firefighter retiring with a break between leaving service as an active member of the firefighters' pension schemes 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