Commutation of Pension
✓ Last verified 14 Sep 2026
The short version
Commutation lets a pensioner convert a portion of their future monthly pension into an immediate lump sum, permanently reducing the monthly pension amount in exchange for cash upfront.
Available in certain pension schemes (commonly discussed alongside government/EPS-style defined-benefit pensions), commutation allows converting a portion of the future pension entitlement into an immediate lump sum at retirement - useful for an immediate need (clearing a debt, a one-time expense) but at the permanent cost of a lower ongoing monthly pension for the rest of the pensioner's life. The commuted portion is typically restored after a set number of years in some scheme structures, but not universally - checking your specific scheme's rules before commuting is essential, since it's generally a one-time, difficult-to-reverse choice.
Want this worked out for your own numbers?