Dan_Brown
Sergeant
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The commutation lump sum is like a loan. You undertook to repay the loan between your date of discharge and age 55. If your pension is in payment, the repayments come from your pension before tax. If your pension is not in payment, the repayments come from your pay after tax.
So, if you are repaying from your pension before tax, it is going to be an advantage to the tune of the tax you are not paying on the amount you are repaying.
Wut?!