Inverse commutation

Hydrobam

I am considering retiring in the next year and would receive a pension and a lump sum. One option available is to buy additional pension with some or all of the lump sum, which is called inverse commutation. Does anyone know if inverse commutation is restricted to the £40,000 annual maximum set by the government for paying into a pension or can you pay more without a penalty? If there is that restriction, will the £40,000 need to include the money paid in by my employer that year?

System

Irrelevant! You are not paying into the pension, you are choosing how to take the money out of the pension.

dunroving

Check your scheme rules, but you should be able to reverse-commute as much as you want. I reverse-commuted all the TFLS for my defined-benefits pension.