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Phil Thomas
Senior Technical Support Consultant

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Trivial commutation lump sums

Published  07 August 2026
   10 min read

The trivial commutation lump sum rules allow individuals aged 55 (57 from April 2028) or older to take certain pension benefits as a one-off lump sum if the total value of their pension rights across all schemes does not exceed £30,000.

Key facts

  • Trivial commutation lump sums allow certain pension benefits to be taken as a one-off lump sum where the total value of all registered pension scheme benefits is no more than £30,000.
  • The individual must normally have reached age 55, rising to age 57 from 6 April 2028, unless they qualify earlier due to ill health or a protected pension age.
  • The £30,000 limit is tested across all the individual’s registered pension scheme benefits, including pensions already in payment and defined contribution benefits.
  • A nominated date is used to value the individual’s benefits, and once the first trivial commutation lump sum is paid, any further payments must be made within the same 12-month commutation period.
  • Where uncrystallised benefits are commuted, up to 25% can normally be paid tax-free, with the balance taxed as pension income through PAYE.
  • Trivial commutation lump sums are not tested against the lump sum allowance or lump sum and death benefit allowance and do not trigger the money purchase annual allowance. They must have some available LSA to be able to take a trivial commutation.

Who can take their benefits under the trivial commutation lump sum rules?

Generally, where an individual:

  • has reached the age of 55 (or age 57 from 6 April 2028), or earlier if they meet the ill health condition or have a protected pension age, AND
  • the combined value of all their registered pension scheme benefits is not more than £30,000.

they can take all their defined benefits, collective money purchase pension benefits and any in-payment money purchase in-house scheme pension payable by the scheme administrator as a trivial commutation lump sum. This must include the value of any pensions in payment.

What are the conditions for paying benefits as a trivial commutation lump sum?

Before the benefits can be taken as a trivial lump sum, the following must apply:

  • No previous trivial commutation lump sum can have been paid more than 12 months ago.
  • For any scheme paying a trivial commutation lump sum, whether it is a defined benefit, collective money purchase benefits or in‑house scheme pension, the payment must extinguish all the individual’s benefits in that scheme. If the member takes trivial commutation from more than one scheme, all trivial commutation payments must be made within the same 12‑month commutation period starting with the first payment.
  • Trivial commutation lump sums are not relevant benefit crystallisation events so they do not reduce an individual’s lump sum allowance (LSA) or lump sum and death benefit allowance (LSDBA), but the individual must still have some LSA available when the payment is made.
  • The total value of all the individual's benefits (not just the defined benefits or collective money purchase benefits) including those in payment can't be more than £30,000.
  • The individual must be at least aged 55 (or 57 from 6 April 2028), or earlier if they meet the ill health condition or have a protected pension age, but there is no maximum age.
  • Any contributions made by or on behalf of the individual, or pension rights that accrued after the nominated date cannot be commuted and paid as a trivial commutation lump sum.
  • After the trivial commutation lump sum payment has been made from a registered pension scheme the individual can have no rights left in that scheme.

What is the nominated date and 12-month commutation period?

When an individual decides they would like to take some or all their benefits as a trivial commutation lump sum, they can nominate a date at which all their benefits are valued. This is called the 'nominated date'.

The combined value of all the individual's benefits at the nominated date is used to ensure the total benefits value is no more than £30,000. The individual then has up to 3 months from the nominated date to start taking their benefits.

If the first trivial commutation lump sum is not paid within the 3-month period, a new date must be selected, and a new check carried out to ensure the benefits value is no more than £30,000. The nominated date cannot be earlier than 3 months before the individual's 55th birthday or their protected pension age if it applies.

A default nominated date will be used if the individual does not nominate a specific date, this will be the date of the first payment.

The individual is not obliged to take all their benefits as a trivial commutation lump sum, but once the first lump sum is paid the individual only has 12 months in which to take any other trivial commutation lump sum benefits. This period is called the 'commutation period' and starts when the first payment is made. Once this commutation period has ended no further trivial commutation lump sums can be taken.

Trivial commutation lump sum payments may be paid in respect of different defined benefits schemes or collective money purchase schemes, but all payments must be made within a single 12-month period.

How do you value the benefits at the nominated date for a trivial commutation lump sum?

It is only possible for benefits to be taken as a trivial commutation lump sum if the combined value of all the individual's pension benefits, including pensions in payment, is no more than £30,000.

In certain circumstances it will not be obvious if an individual's benefits value exceeds £30,000. The following table sets out how the benefits should be valued:

Type of benefit

Calculation of benefits value
Uncrystallised defined benefits or collective money purchase arrangement Multiply the individual's annual pension before commutation by 20. Where lump sums are provided otherwise than by commutation, they are valued using a factor of 1:1 and are added to the above value.
Uncrystallised money purchase arrangement The total market value of the funds/assets held.
Cash balance arrangement The value of the benefits as calculated in line with the scheme rules.
Annuity in payment before 6 April 2006 Multiply the individual's annual annuity at 5 April 2006 by 25.
Income drawdown in payment before 6 April 2006 Multiply the relevant GAD maximum withdrawal at 5 April 2006 by 25.
Annuities/scheme pensions/ income drawdown in payment after 5 April 2006 The value of benefits at crystallisation.

To value an individual’s pension benefits, the following can be ignored:

  • any small lump sum, winding up lump sums, refund of excess contribution lump sums or short service refund lump sums paid after 5 April 2006 but before the nominated date, or
  • pension rights paid out as a trivial commutation lump sum before 6 April 2006

 

How are trivial commutation lump sum payments taxed?

Where the trivial commutation lump sum is from uncrystallised benefits, the individual can receive up to 25% of the payment tax-free. The rest (or the full amount, if already crystallised) is eventually payable at the individual's marginal rate of income tax. But depending on the individual circumstances the tax that will be deducted from the payment is as follows:

  • Where the lump sum payment is in respect of a pension already in payment the PAYE code already in operation will be used.
  • Where the pension being commuted was not already in payment the basic rate (BR) tax code will be used.

If the individual thinks they have paid too much, or not enough tax, they will need to discuss this with HMRC.

It is important to be aware that taking lump sums from the pension in this way could push the individual into a higher income tax bracket, which could mean they need to pay more tax than they originally thought.

If an individual is entitled to more than 25% of their benefits value as tax-free cash, the amount they can take tax-free on payment of a trivial commutation lump sum will still only be 25%. The enhanced entitlement to tax-free cash will be lost.

If a pension in payment is commuted and taken as a trivial commutation lump sum, none of that trivial commutation lump sum will be tax-free.

Is a trivial commutation lump sum payment tested against the lump sum allowance and lump sum and death benefit allowance?

No, trivial commutation lump sums are not relevant benefit crystallisation events and are not tested against the lump sum and lump sum death benefit allowances. An individual however must have some available LSA to be able to take a trivial commutation.

Does a trivial commutation lump sum payment trigger the money purchase annual allowance (MPAA)?

No, the money purchase annual allowance is not triggered if the individual takes a trivial commutation lump sum.

Frequently asked questions

Let's look at some common questions we've been asked.

A trivial commutation lump sum allows certain pension benefits to be taken as a one-off lump sum where the total value of all the individual’s registered pension scheme benefits is no more than £30,000. It mainly applies to defined benefits, collective money purchase benefits and certain in-payment money purchase in-house scheme pensions.

An individual can normally take benefits as a trivial commutation lump sum if they have reached age 55, (57 from 6 April 2028), or earlier if they meet the ill-health condition or have a protected pension age. The total value of all their registered pension scheme benefits must not exceed £30,000.

The £30,000 limit is the maximum value of all the individual’s pension rights across all registered pension schemes. This includes benefits not being commuted, pensions already in payment and defined contribution benefits, even though ordinary defined contribution benefits cannot generally be paid as a trivial commutation lump sum.

Ordinary defined contribution benefits cannot generally be paid as a trivial commutation lump sum. However, they are still included when checking whether the individual’s total pension benefits are within the £30,000 limit. The main exception is certain in-payment money purchase in-house scheme pensions.

The nominated date is the date used to value all of the individual’s pension benefits to check whether they are within the £30,000 trivial commutation limit. If the individual does not nominate a date, the default nominated date is the date of the first trivial commutation lump sum payment.

Once the first trivial commutation lump sum is paid, any further trivial commutation lump sums must be paid within the same 12-month commutation period. After that period ends, no further trivial commutation lump sums can be paid.

Uncrystallised defined benefits and collective money purchase benefits are generally valued by multiplying the annual pension before commutation by 20, with certain lump sums added separately. Uncrystallised money purchase benefits are valued using the total market value of the funds or assets held.

Where a trivial commutation lump sum is paid from uncrystallised benefits, up to 25% can usually be paid tax-free and the balance is taxed as pension income through PAYE. If a pension already in payment is commuted, the full trivial commutation lump sum is taxable.

No. Trivial commutation lump sums are not relevant benefit crystallisation events, so they are not tested against the lump sum allowance or the lump sum and death benefit allowance. However, the individual must still have some lump sum allowance available when the payment is made.

No. Taking a trivial commutation lump sum does not trigger the money purchase annual allowance.

Yes. The taxable part of a trivial commutation lump sum is taxed as pension income, so it could increase the individual’s taxable income for the year and potentially push them into a higher income tax band.

Yes, it is possible to take trivial commutation lump sums from more than one scheme, but all payments must be made within the same 12-month commutation period starting with the first payment.

On this page you will find all of our Triviality frequently asked questions. We outline the rules on triviality and small pots and how they are taxed.

Under a defined benefit scheme, it's still possible for benefits to be taken on the grounds of triviality, but the following must apply:

  • The scheme rules allow it.
  • No previous trivial lump sum paid more than 12 months ago.
  • All benefits under the scheme must be taken at the same time.
  • The total benefits value of the individual's pension savings is not more than £30,000.
  • The individual has some lump sum allowance available. 
  • The individual has reached at least age 55 (57 from April 2028) or a lower age if the individual meets the ill-health requirement or if the individual has a protected pension age.
  • After the payment the individual has no rights left in the scheme.
  • 25% of lump sum will be tax-free, the balance will be taxed at the individual's marginal rate.

HMRC Pensions Tax Manual - PTM63500: Trivial commutation lump sum (opens in a new window)

Under a money purchase scheme triviality is no longer an option but benefits can be taken as an uncrystallised funds pension lump sum (UFPLS)

HMRC Pensions Tax Manual - PTM063300: Uncrystallised funds pension lump sum (UFPLS) (opens in a new window)

No, since 6 April 2015 it’s only defined benefit schemes that can use the triviality rules to take benefits. Since that date benefits can be taken as an uncrystallised funds pension lump sum (UFPLS) or as a small pot. 

You need to multiply the individual's annual pension before commutation by 20, unless HMRC has agreed to the use of an alternative valuation factor. Tax-free cash lump sums, excluding those provided by commutation, are valued using a factor of 1:1 and are added to the above value.

HMRC Pensions Tax Manual - PTM063500: Trivial commutation lump sum - Valuing pension rights (opens in a new window)

Yes, they do.

The small lump sum rules allow someone aged 55 (57 from April 2028) or over to take a lump sum of no more than £10,000 as long as it extinguishes their rights under the scheme (occupational) or arrangement (personal pension or stakeholder) plan. For personal pension or stakeholder arrangements, three lump sums can be taken in an individual's lifetime. There is no limit to the number of unrelated* occupational schemes that can be commuted in this way.

The trivial commutation rules allow someone in a defined benefits scheme aged 55 (57 from April 2028) or over with total pension rights of no more than £30,000 to take them as a lump sum. Benefits can be taken before age 55 (57 from April 2028) if the individual meets the ill-health requirement or if they have a protected pension age.

So, if someone takes their small lump sums first and their remaining defined benefits pension rights are then within £30,000, potentially rights of up to £60,000 could be taken - 3 personal pension or stakeholder lump sums of £10,000 each and then £30,000 under trivial commutation.

* If the scheme is a larger pension scheme, there is no need to include rights under a related scheme. A larger pension scheme is one that has at least 50 members and meets various other conditions.

HMRC Pensions Tax Manual - PTM063700: Small pension payments (opens in a new window)

HMRC Pensions Tax Manual - PTM063500: Trivial commutation lump sum (opens in a new window)

To be able to commute benefits from a defined benefit scheme on triviality grounds, the total value of all pension rights cannot be more than £30,000, so at first sight it would appear he couldn't.

However, it is possible for non-occupational pension plans (such as personal pension plans, stakeholder pension plans, s.32 transfer plans) as well as occupational schemes to be commuted if the individual is 55 (57 from April 2028) or over, the amount paid is no more than £10,000 and it extinguishes all rights in the arrangement. It doesn't matter what the value of the other pension rights are. For non-occupational plans, you can do this three times in your lifetime.

So, Sanjit could commute his personal pension plan and his stakeholder pension plan under these rules. This then just leaves his pension rights in the defined benefit scheme. As this is not worth more than £30,000, the defined benefit scheme rights could then be commuted on triviality grounds.

More information is available in our Technical Central articles on triviality and small lump sums.

No, they have not increased. The value of the individual's benefits value under the scheme cannot be more than £18,000.

HMRC Pensions Tax Manual PTM63600: Lump sums: winding-up lump sum (opens in a new window)

Disclaimer

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.