How big a lump sum could your firefighter pension buy?

How the firefighter pension lump sum works

Commutation means giving up part of your annual firefighter pension in exchange for a one-off tax-free lump sum when you retire. Nothing is added: the scheme's actuaries convert some of the income you would have received into an equivalent capital sum. The rate of exchange is the commutation factor, the number of pounds of lump sum you receive for each £1 of annual pension you give up. A factor of 12 means £12,000 of cash for £1,000 a year of pension. The higher the factor, the better the deal, and the longer it takes for the lost income to add up to the lump sum you were paid.

The calculator applies four steps. It picks the factor for your scheme and age, works out the largest fraction of your pension you are allowed to commute, multiplies the pension you give up by the factor to get the lump sum, and subtracts the pension you give up from your annual pension to give the reduced income you keep. The calculation runs in your browser and your inputs are kept only on your device. Nothing is sent anywhere unless you choose to ask the AI assistant a question or save a report to your account.

What the calculator shows you

The Your result tab gives the lump sum, the pension you keep and a plain-English reading of what the swap means. The Break-even tab draws the lump sum against the income you give up as the years pass, so you can see the age at which the two meet and drag the "if you live to" slider to see who is ahead at any age. The Limits and tax tab shows each limit as a bar so you can see which one is stopping you commuting more. For FPS 1992 it also charts how the factor falls with age.

The paid report adds side-by-side scenarios, a today's-money view, "what would I need" calculators that work backwards from a target lump sum, and a printable briefing with the questions to put to your administrator.

Commutation factors by scheme

The three schemes work differently, and this is the single most important thing to get right.

• FPS 2015 (England): £12 of lump sum for every £1 of annual pension given up, up to a maximum of 25% of the pension, subject to the tax limits. The factor does not change with age or sex. The published scheme guide gives the example of a £16,000 pension where the maximum quarter, £4,000, is commuted to give a £48,000 lump sum and a £12,000 pension.
• FPS 2006 (England): the same 12 to 1 rate and the same 25% maximum, according to published administrator guidance. Normal pension age is 60.
• FPS 1992: an age-based table produced by the Government Actuary's Department (GAD). The factors are much higher than 12 because the scheme has an earlier pension age of 55, so the pension you give up would be paid for longer. The table was revised on 21 May 2026.

FPS 1992 factors from 21 May 2026

On 19 May 2026 HM Treasury raised the SCAPE discount rate from 1.7% to 2.0% above CPI, and GAD issued lower commutation factors for the 1992 scheme with immediate effect from 21 May 2026. These unisex factors apply to England, and Scotland uses them through its underpin. The calculator holds the full table by age and completed months. A sample of the whole-year rows:

The factors fall with age because the pension you give up would be paid for fewer years. Firefighters who had already retired before 21 May 2026 were not affected. Anyone in the middle of retiring who had a quote based on the old factors should receive a revised quote, and can review their decision before retiring.

The limits on how much you can commute

You cannot commute everything, and the calculator applies the limits in this order, showing you the one that bites.

1. The scheme limit of 25% of your pension. In most cases a quarter of the pension is the ceiling.
2. The HMRC 25% test. For a lump sum to be authorised it must not exceed 25% of the total value of the benefits. HMRC values the pension you keep at 20 times its annual amount, so the test is: lump sum no more than 25% of (lump sum plus 20 times the remaining pension). Rearranged, the largest fraction you can commute is 20 divided by (3 times the factor plus 20). With a factor of 12 that is 35.7%, so the 25% scheme limit binds first. With the 1992 factor of 22.6 at age 55 it is 22.8%, and the tax rule binds first. GAD's guidance notes that a factor above 20 makes it possible to breach this limit by commuting the full 25%, and the answer is to commute a smaller proportion.
3. The lump sum allowance. Since the lifetime allowance was abolished on 6 April 2024, most people can take up to £268,275 of tax-free lump sums across all their pensions (GOV.UK, unchanged for 2026/27). If you have protections or earlier tax-free cash, yours may differ. Enter your remaining allowance in the advanced section.
4. The 2.25 times restriction (FPS 1992 only). GAD's guidance for England and Wales says a member retiring with an ordinary pension after at least 25 but under 30 years of service, before age 55, can commute to give a lump sum of no more than 2.25 times the annual pension. Scottish guidance says the restriction was lifted for Scotland from 1 April 2022. The box is off by default because your administrator decides whether it applies to you.

If you ask for more than the limits allow, the result is capped and the tool names the limit. The administrator's calculation is the one that counts, and a lump sum above the tax limits can be taxed as an unauthorised payment.

Worked examples with real numbers

Example 1: FPS 2015, £16,000 pension, commute 25%

You give up 25% of £16,000, which is £4,000 a year. The lump sum is £4,000 x 12 = £48,000, and your pension falls to £12,000 a year, or £1,000 a month. With no pension increases, the £48,000 is used up by lost pension after 12 years (£4,000 x 12), so if you retire at 60 you are behind after age 72. If pensions rise by 2% a year the lost income grows too, and the break-even moves to about 10.9 years, at around 70.9. That is the number the calculator shows as "break-even with increases".

Example 2: FPS 1992 at 55 on £30,000, commute 20%

At exactly 55 the 2026 factor is 22.6. Giving up 20% is £6,000 a year. The lump sum is £6,000 x 22.6 = £135,600 and the pension falls to £24,000. Break-even with no increases is 22.6 years, age 77.6. The HMRC test would allow up to about 22.8% here, so 20% is comfortably within it, and 25% would not be.

Example 3: the same pension at 60

At exactly 60 the factor is 19.9, and the HMRC test allows about 25.1%, so the full 25% is available. Giving up 25% of £30,000 is £7,500 and the lump sum is £7,500 x 19.9 = £149,250, leaving £22,500 a year. The pension you would be starting from at 60 will usually be different from the one at 55, so enter the figure from your own statement or quote for each age rather than reusing one number.

Break-even: what it does and does not tell you

Break-even is the number of years of pension you would have to receive before the income you gave up equals the lump sum you took. It is simply the lump sum divided by the annual pension you gave up, which equals the factor when pensions do not rise. Because firefighter pensions are increased in line with inflation, the pension you gave up would have grown each year, so the true break-even arrives sooner. That is why the calculator shows two figures and lets you change the increase assumption.

Treat it as a guide rather than a verdict. It ignores what you could earn by investing the lump sum, the value of paying off a mortgage or debt, the possible effect on your tax position, and how survivor benefits work for your dependants. It also cannot know how long you will live. A short break-even is not a reason to commute if you do not need the cash, and a long one is not a reason to refuse if the lump sum solves an expensive problem.

Common mistakes to avoid

• Using the wrong pension figure. Enter the pension you will actually receive, after any early-retirement reduction and before commutation. If your administrator's quote already shows the pension after commutation, add the commuted part back.
• Assuming 25% is always available. In FPS 1992 at younger ages the tax test caps you below 25%. Check the answer against the quote.
• Forgetting the timing. You must give written notice of how much to commute before your first pension payment. After that it is too late.
• Mixing schemes. If you have both 1992 and 2015 benefits, for instance through transitional protection or the McCloud remedy, each part has its own factor. This calculator handles one scheme at a time, so run each part separately and add the results.
• Ignoring old numbers. Older articles and forum posts quote 1992 factors from before 21 May 2026. They are now too high.
• Treating the lump sum as extra. It is a permanent swap for lower income, not a bonus.

Related guides and tools

Start with the full guide to firefighter pension lump sums and commutation, then see how to calculate your firefighter pension and the FPS 2015 guide. If you served across the remedy period, read the McCloud remedy guide before choosing. To project a future CARE pension, use the FPS 2015 pension calculator, or compare retirement ages in Pension Command. For the full comparison with a printable report, see the Firefighter Pension & Lump-Sum Report.

Frequently asked questions

Sources and assumptions

• FPS 1992 commutation factors from 21 May 2026 (GAD): SPPA Firefighters Circular 2026/03, Annex A (table for England, used in Scotland through the underpin). Also Welsh Government circular W-FRSC(2026)09, confirming revised factors from 21 May 2026 for Wales.
• FPS 1992 limits and the HMRC 25% test: GAD, Commutation on retirement, 3 April 2023 (2.25 times restriction, 25% HMRC limit).
• FPS 2015 £12 per £1 and 25% limit: Guide to the Firefighters' Pension Scheme 2015 (England). FPS 2006 12 to 1 and 25%: LPPA FPS retirement guide.
• Lump sum allowance £268,275: GOV.UK, individual lump sum allowances.
• Income Tax figures come from the site's 2026/27 tax module. The HMRC test formula assumes the standard 20 times valuation of the pension you keep. Break-even uses your illustrative pension-increase assumption.
• Not verified and therefore not built in: FPS 2006 in Wales, Scotland and Northern Ireland, FPS 2015 in Wales, Scotland and Northern Ireland, and the Northern Ireland 1992-equivalent factors after 21 May 2026. Use the own-factor input with your administrator's quote.

This is an independent illustration, not financial, tax or pension advice. Your scheme administrator's written quote and payroll records control, and factors can change when GAD reviews them.