How’s my pension worked out?
Each year, 1/49th of your pensionable pay is added to your pension account. Every April, the amount in your account is adjusted in line with the cost of living. When you retire, the total in your pension account becomes your yearly pension for life.
For example:
| Scheme year | Opening balance | Pension build up in scheme year | Total account 31 March | Cost of living adjustment | Total pension |
|---|---|---|---|---|---|
| 2022/23 | £0.00 | £24,500/49 = £500.00 | £500.00 | 10.1% £50.50 | £550.50 |
| 2023/24 | £550.50 | £25,000/49 = £510.20 | £1,060.70 | 6.7% £71.07 | £1,131.77 |
| 2024/25 | £1,131.77 | £27,000/49 = £551.02 | £1,682.79 | 1.7% £28.61 | £1,711.40 |
| 2025/26 | £1,711.40 | £27,500/49 = £561.22 | £2,272.62 | 3.8% £86.36 | £2,358.98 |
Taking a lump sum
When you retire, you can choose to give up part of your yearly pension to get a one‑off lump sum.
- You can take up to 25% of the value of your pension as a lump sum.
- For every £1 of yearly pension you give up, you get £12 as a lump sum.
- The lump sum is usually tax‑free, but there is a total limit of £268,275 across all your UK pensions.
