Trivial commutation limits to increase

The government has increased the trivial commutation limits, from £18,000 to £30,000.

Money-Thinkstock-2014

Trivial commutation is the opportunity, offered by pension providers, to convert 100% of a small pension into a one-off cash payment.

The cash received is known as a trivial commutation lump sum.

In the 2014 Budget, Chancellor George Osborne announced that the government will allow people with defined contribution pension wealth more flexibility to access their savings by increasing the total pension wealth that people can have before they are no longer entitled to receive lump sums.

The increase is subject to people’s pension scheme rules.

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The changes will take effect from 27 March.

Malcolm McLean, consultant at Barnett Waddingham, said: “The rise in the trivial commutation limits from £18,000 to £30,000 overall is much higher than anyone anticipated ahead of the Budget.”