The meaning of Trivial Commutation, known as Trivial Lump Sum too is not so trivial. These terms are related to the new pensions’ legislation in UK.
The knowledge of what they mean can help you to better understand the new rules about pensions. It may help you to better communicate with authorities or it may just inspire you to look for an expert advice, related to your pension.
The meaning of Trivial commutation and Trivial lump sum is the same. Both expressions refer to the options you have if you consider the scenario to take your pension as a cash lump sum and your pension belongs to the category of so called small pensions.
If you want to receive your small pension as a trivial commutation lump sum you should meet the following criteria:
- You should be at least 55 years old or you should have the right to retire earlier because of ill-health problems,
- The total value of your pension benefits is not exceeding £30 000.
In addition to the option for receiving of the aforementioned lump sum, you may choose to commute or to convert your small pension in to a small pension pot. This means that you may exchange your small pension for a small pension pot.
Possibly, the strange at first sight term “trivial commutation” comes from this pension’s alternative. Under the small pots rule you are allowed to give up three pension arrangements.
Pretty often, advisors are telling their clients that they will make valuation of their pension for trivial commutation purposes. To do this, they would just multiply by 20 your annual pension entitlement and will add any other tax-free cash sums.
In conclusion, it is worth to say that Trivial Commutation, known as Trivial Lump Sum is not at all so trivial. Although your pension may be small, before you consider to withdraw it as a cash lump sum it is good to get expert’s opinion and to weigh all possible for your situation alternatives.
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