Trivial commutation lump sums
Learn in what circumstances trivial commutation lump sum or triviality rules can help your clients take all of their pension benefits as a one-off lump sum.
Key facts
Several conditions must be met before a payment is made, including the total value of all benefits being no more than £30,000.
- An individual can nominate a date at which all their benefits are valued.
- Assuming it's an uncrystallised amount being commuted, 25% of the trivial commutation lump sum is tax-free, with the balance being taxed through the individual's PAYE.
- Since 6 April 2015 the triviality rules no longer apply to defined contribution schemes. The triviality option has been replaced with the uncrystallised pension fund lump sum and small lump sums options for defined contribution schemes.
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.