Police pension commutation factors explained

Police pension commutation factors set how much lump sum you get for each £1 of yearly pension you give up, and they were cut in May 2026.

GOV.UK says Pension Wise leaves out final salary and career average schemes, which rules it out for a police pension, so your force's pensions administrator is the first person to ask. Swapping pension for cash changes what your household lives on for the rest of retirement, and this page's form has an FCA-authorised adviser phone you back without a fee.

What is a police pension commutation factor, and what makes one good?

A commutation factor is the multiplier that turns pension given up into cash. The Government Actuary's Department (GAD), the scheme actuary, puts it this way: "The commutation factor determines how much lump sum is provided in exchange for the pension given up." GAD's own illustration uses a factor of 20, so each £1 of yearly pension given up provides a £20 lump sum.

No single number is "good" in itself. A higher factor pays more cash for each pound of pension surrendered, but GAD says the factors are set so that, on average, the lump sum is expected to equal the cost of the pension given up. The aim is fairness between cash and pension, not a bargain either way. Age matters too: older retirees typically get a lower factor, because their pension is expected to be paid for fewer years.

The deal is permanent. The cash is paid once, and the yearly pension stays lower for the rest of your life. What a smaller pension means for a household is covered on the page on how much a police pension pays.

Which police pension schemes use commutation factors?

Only the oldest scheme does in the sense this page covers. GAD's May 2026 administrator Q&A, published on fpsregs.org, applies only to schemes whose factors are reviewed and can change, and it says it does not apply to the 2006 and 2015 schemes. Its footnote names the schemes concerned as the Police Pension Scheme 1987 in England, Wales and Scotland, and the Police Pension Scheme 1988 in Northern Ireland.

The 2015 scheme works differently. The Home Office's guide to it says: "You can give up part of your pension (up to one quarter) to get a lump sum when you retire. Every pound of pension that you give up will be paid as £12 lump sum." That is a fixed rate in the guide, not a table that moves with discount rates. Which of the three schemes your service sits in is set out on the page weighing up the police pension schemes.

Many officers hold service in more than one scheme, so one retirement can involve a changing factor for some years and a fixed one for others. How that mix applies to your own service is something an adviser can walk through for nothing once you have sent the form.

New police pension commutation factors from May 2026: what changed?

The factors fell. GAD's administrator note says: "Commutation factors reduced in May 2026, which means that members will receive a smaller lump sum in exchange for the pension given up." The revised table was issued on 21 May 2026 and came into force immediately.

The trigger was a change to the discount rate the Treasury uses for public service pension valuations. GAD says the "SCAPE discount rate" was to be increased from CPI + 1.7% a year to CPI + 2.0% a year. Because the factors reflect what the pension given up costs the employer, they fell with it. Mortality assumptions and the passage of time also played a part, but GAD says these have a much smaller effect.

Two points keep the change in proportion. First, GAD states that the current factors are still higher than those that applied before 3 April 2023. Second, the same rate moved the other way in 2023: the Scottish police pensions circular of 18 April 2023 recorded an increase to the lump sum retirement factors at all ages. Factors rise and fall with these assumptions, which is why a figure quoted a year ago may not match today's.

The same review covered the firefighters' 1992 scheme, which has its own page at the firefighters' scheme comparison.

How to work out a police pension lump sum from the factor

Multiply the pension you give up by the factor. Under the 1987 scheme in England and Wales the lump sum is the actuarial equivalent of the pension given up at retirement, calculated from tables the scheme actuary prepares. GAD's illustration shows the arithmetic: "A member with a £10,000 a year pension at retirement giving up £1,000 a year of pension would provide a £20,000 lump sum and the pension would reduce to £9,000 a year at retirement." The factor of 20 there is illustrative, not the current table.

There are limits on how much can be exchanged. GAD's 2023 guidance says that in most cases a quarter of the pension can be commuted, and that an ordinary pension earned over at least 25 but less than 30 years can, with some exceptions, give a lump sum of no more than two and a quarter times the gross annual pension. How much you may commute is the question on the police pension maximum commutation page.

Tax sets a second ceiling. GAD's guidance says a lump sum must not exceed 25% of the total value of benefits crystallised to be authorised under the tax rules, and it lists a member with a factor above 20 commuting 25% of their pension as a case where that could be breached. The usual remedy it gives is commuting a smaller share. The same guidance adds that where an officer's savings pass £268,275 for retirements on or after 6 April 2023, an additional tax charge may fall due. The tax side is on the police pension tax page, and the allowance is on the lump sum and death benefit allowance page.

Before the cash is worth weighing against the lost income, the figures need to come from your own record. Before notice goes to your force, talk the trade through with an FCA-authorised adviser; the short form takes your number and the call itself costs nothing.

Police pension commutation factors table: which one applies to you?

The table in force on your retirement date applies. The retirement calculator mentioned in GAD's note warns that the cash at your actual retirement depends on the factors then in effect. So a quote or annual benefit statement produced before 21 May 2026 may show a bigger lump sum than the pension actually pays now. For a statement or quotation, GAD says administrators are best placed to comment.

The current table is not printed here because it changes. GAD's Factors Guidance Hub says calculations with current or future dates should take factors from the current Consolidated Factor Workbook. The same hub keeps PDFs of historic guidance notes with historic factors, which is where a 2023 table, the one in force from 3 April 2023 until the May 2026 review, now sits. The hub is written for administrators, so ask your administrator for the figure that applies to you.

For officers affected by the McCloud remedy, the hub tells administrators to view the McCloud guidance first, so the remedy is built into the calculation. The remedy choice is explained on the police pension remedy page.

Timing has caused disputes before. A Home Office circular of 1 May 2009 recorded that, after a High Court judgment, the revised lump sum commutation factors "issued last year are now backdated to 1 December 2006". GAD's May 2026 note cites a March 2009 High Court finding that factors take effect on the date they are prepared, and says the 2023 review ran the same way as 2026, with factors issued and effective straight away.

Police Scotland pension commutation factors

Scottish officers in the 1987 scheme are covered by the same GAD review, but the Scottish Public Pensions Agency (SPPA) adds a protection. Its 2023 circular describes an underpin in Scotland, under which the higher of the English or Scottish scheme factors is used for officers' lump sums. That circular applied the revised factors from 3 April 2023. The Scottish schemes have their own administrator, covered on the Scottish police pension page.

How the underpin interacts with the May 2026 table is a question for SPPA. An adviser can explain the general picture without charge if you send the form and mention Scotland.

Before you commute: what to check first

Notice comes first. The 1987 scheme guide says that "you must give notice to your force's pensions administrator before your date of retirement or if your pension does not come into payment on retirement, before the pension comes into payment". Because the factor in force on the day decides the amount, ask for a fresh quotation close to the date.

GAD's guidance is explicit that it does not advise whether a member should commute. Whether to take the cash depends on what you would do with it and what the smaller pension leaves you to live on. If the lump sum is for a mortgage, weigh that against the lost income, and consider ill-health or early retirement rules, covered on the police ill-health retirement page and the page on taking a police pension early. More on who can help is on the police pension advice page and in the final salary pension explainer.

Cash now against income later is a big trade, so leave your number in the quick form here and ask an FCA-authorised adviser to talk your police figures through.

Commutation factor FAQ

Why is my lump sum smaller than my earlier quote?

Quotes use the factors in force when they were produced, and the revised table of 21 May 2026 took effect immediately. Your administrator can re-run the figure with the factor that applies on your retirement date.

Do the 2006 and 2015 schemes have commutation factor tables?

GAD's May 2026 note says its factor review does not apply to them. The 2015 scheme's guide gives a fixed £12 lump sum per £1 of pension given up, and your administrator can confirm how a 2006 scheme lump sum is worked out.

Is a police pension commutation calculator reliable?

Calculators can give an estimate, but GAD quotes the wording in one: it uses the factors currently in effect, and the cash at your actual retirement depends on the factors then in force. Treat the answer as an estimate.

Will tax come off a commuted police lump sum?

GAD's 2023 guidance ties the tax position to the 25% HMRC limit, and says an additional tax charge may fall due where savings pass £268,275. The detail for police officers is on the police pension tax page, and a general guide is on the tax-free lump sum page.

Who decides the factors?

GAD, as scheme actuary, is required by the regulations to set them. The Treasury sets the discount rate, and the Home Office and the other responsible authorities set the scheme rules.

Do these changes affect firefighters too?

Yes, the same GAD review covered the Firefighters' Pension Scheme 1992, since its commutation factor was reviewed in the same way. The comparison of those schemes is on the firefighters' pension schemes page.