Under AFPS 75 there are two forms of commutation: Resettlement Commutation and Life Commutation. Commutation means giving up part of your pension in return for a lump sum. It is not an automatic right; you have to apply for it. For more information see the document below. With effect from 1 April 1996 you cannot take advantage of both forms concurrently.
Note: Once the completed application forms have been forwarded to SPVA Pension Division, and they have been processed, the decision is final and cannot be reversed.
Impact of Finance Act 2004 on Commutation
The Finance Act 2004 (FA 2004), which came into force on 6 April 2006, stipulates that a member’s pension may not be reduced from one year to the next except in exceptional prescribed circumstances. This Act, therefore, has some impact on your ability to commute your pension.