1. What is a Lump Sum Calculator LGPS?

Definition: This calculator estimates the lump sum payment from the Local Government Pension Scheme (LGPS) based on the annual pension amount you're willing to give up.

Purpose: It helps LGPS members understand how much tax-free lump sum they can receive in exchange for reducing their annual pension.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Lump Sum — One-time tax-free payment ($)
• Pension Given Up — Reduction in annual pension ($/year)

Explanation: For every $1 of annual pension you give up, you receive $12 as a tax-free lump sum under LGPS rules.

3. Importance of Lump Sum Calculation

Details: Understanding this trade-off helps members make informed decisions about their retirement income strategy.

4. Using the Calculator

Tips: Enter the amount of annual pension you're considering giving up (in dollars per year). The value must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Is the lump sum really tax-free?
A: Yes, the LGPS lump sum is paid tax-free under current UK pension rules.

Q2: What's the maximum lump sum I can take?
A: The maximum is typically 25% of your total pension value, subject to HMRC limits.

Q3: Can I change my mind after taking a lump sum?
A: No, the decision to exchange pension for lump sum is irreversible once made.

Q4: How does this affect my surviving dependents?
A: Reducing your pension may also reduce benefits payable to your dependents after your death.

Q5: Should I take the maximum lump sum?
A: This depends on your financial circumstances - consider consulting a financial advisor.