Commutation Loan


Our Commutation Loan allows you to unlock part of your commutation up to three years prior to retirement. You could release up to £100,000 or 80% of your commutation entitlement, depending on which amount is lower. This could give you a head start in planning for your retirement, it could allow you to consolidate any existing borrowing or even to reward yourself for many years of hard work.

 

Key Product Information

APR 8.9% APR
Interest charging information Interest-only loan.
Interest rate fixed for the life of the loan.
Interest accrues daily and is charged on a monthly basis.
Repayment information You will make a fixed monthly payment equivalent to 31 days of interest of the total sum borrowed. This ensures that you always cover the maximum amount of interest that will be charged in any one month. Where payments are made in months of less than 31 days the additional amount will be paid off your outstanding loan balance.
You can repay the interest on your loan by payroll deduction or Direct Debit. To see if we offer payroll deduction in your force click here.
First payment due on the first available pay day after drawdown of loan.
Repayment period The maximum loan term is 36 months or 12 months when used for debt consolidation purposes.
Amount of loan available You can borrow up to 80% of your commutation or up to £100,000 – whichever is the lower amount.
The maximum loan for debt consolidation purposes is £50,000.
You can take your agreed loan in stages.
Application/Arrangement Fee No application or arrangement fees apply.
Other Fees None.
Default Fees None.
Early settlement You can repay the loan at any time fully or partially without charge.
Security Once you retire and receive your commutation, the remaining balance on the loan will be deducted.

All loans are subject to affordability and our lending criteria.

 

What we need from you

If you wish to apply for a Commutation Loan we will need to see an up to date pension forecast to establish your commutation amount and you must be within three years of your retirement.
You may wish to speak to a Pensions Advisor or your Pension department before making a decision on commuting part of your pension.

Taking your loan in stages

If you do not wish to borrow all of your agreed loan at once, you can take it in stages. You will sign a new loan agreement each time you borrow extra and you will only pay interest on the funds you have borrowed, not the total amount agreed. This means you would not be penalised if you did not borrow the full amount you originally thought you would.

Using the money to consolidate

We understand that some of our members may wish to use their commutation to pay off any existing borrowing, so that they reduce their outgoings for retirement. We allow our members to use our Commutation Loan as a means of consolidating existing borrowing, we will lend up to £50,000 for this purpose. If you wish to apply for this loan for this purpose you can only apply up to 12 months prior to retirement rather than the usual three years.

Consolidating could reduce your monthly outgoings, leaving you with more disposable cash each month. Care should be taken when consolidating debt. It may increase your total amount payable, or the period, over which it is to be paid, and impair your credit rating. 

If you are unsure what to do, seek independent financial advice.

Life Protection

Life Protection is included up to the age of 70. Loans are protected up to a maximum borrowing of £40,000 per member, this means that your loan would be cleared, ensuring that your debt does not remain outstanding, subject to terms and conditions. All benefits are paid at the discretion of our Board of Directors. Life Protection is not an insurance policy and is not guaranteed. For more information please click here