Trivial Commutation


Last updated: 20/03/2014


Under something called the Trivial Commutation rules, where an individual is aged 60 or over (but less than 75) and their total pension funds from all occupational and personal pension plans is less than £18,000 (rising to £30,000 from 27 March 2014), the entire fund can usually be paid out as a lump sum.


When calculating the value of your pension rights for triviality purposes, all pension rights (excluding State Pension benefits) are taken into account including those pensions already in payment.

Pension rights not in payment and pensions in payment are valued according to different formulas.

You may receive up to 25% of the fund value as a tax-free cash lump sum and the remainder will be paid (and taxed, where appropriate) as earned income.

All relevant pension arrangements must be “cashed-in” (commuted) within the same twelve month period.

If you are unsure about whether you qualify under the above rules, you should contact the HMRC Pension Schemes Office and/or take independent financial advice.

Click here for more information from the HMRC website.