Ask the Expert: Can I still take a lump sum from my pension after redundancy?

Carl Lamb, managing director of Almary Green.

Carl Lamb, managing director of Almary Green.


I’m aged 59 and have worked for the local district council for over 30 years.

I’ve just been offered voluntary redundancy but am worried that it will mean I will lose my pension from the council.

Can you tell me what difference it will make, please?

I would love to retire now but I was hoping to take out a lump sum from my pension to pay off the balance of my mortgage.

Response from Carl Lamb of Almary Green

The good news is that provided you are over age 55, if you are made redundant from the local government pension scheme (LGPS), then your main pension benefits should be paid in full and won’t be treated as if you’re taking early retirement.

You need to have at least two years’ membership of the scheme to qualify for that, but I’m assuming that this isn’t an issue for you.

However, if you’ve taken advantage of the opportunity to build up additional pension entitlements with additional contributions, these extra benefits will be reduced if you start taking the pension earlier than your normal pension age.

The LGPS does allow you to take a lump sum in exchange for some of your pension.

For the years that you were a member before 2008, you will have built up some entitlement to an automatic lump sum but this changed in 2008.

However, you can add to any automatic lump sum entitlement by exchanging some of your pension entitlement: this is normally at a rate of £12 in lump sum for every £1 of pension you exchange.

If you want to exchange some of your pension in this way, you should contact the pension scheme administrator at the LGPS as early as possible to get more details of your options.

You can find out more here.

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