Pensions
The question
To ask the Chancellor of the Exchequer, if she will make an assessment of the potential merits of reinstating trivial commutation following the changes to the Lifetime Allowance this year.
Answered by Tulip Siddiq
For defined benefit (DB) pensions, trivial commutation continues to exist. If an individual’s total pension wealth across all DB pension schemes (excluding their state pension) is no more than £30,000, they may be able to surrender their pension for a taxable one-off payment (though usually up to 25% is available tax-free as with other kinds of pension withdrawal). Alternatively, if an individual’s pension within a scheme is valued at no more than £10,000, it may be possible to surrender this for a taxable one-off payment without any assessment against their total pension wealth.
For defined contribution pensions, trivial commutation was removed because Pension Freedoms reforms meant that trivial commutation was no longer needed.
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