If the value of your funds from all your registered pension arrangements is less than 1% of the Standard Lifetime Allowance (SLA) (£17,500 in tax year 2009/10) you may be eligible to take your benefits as a lump sum on the grounds of triviality.
Rather than take an annuity, you are eligible to commute your pension arrangements if you can say yes to all of these conditions:
- You are aged between 60 and 75.
- You are including all of your registered pension arrangements for the purpose of calculating whether they fall within the rules and can be commuted. Please understand that when we say all, we mean for example registered pension arrangements with any insurance company, deferred company pensions, any existing company pension (this is not an exhaustive list).
- You are applying for commutation of your registered pension arrangements within a single 12-month period. (It is important that you realise you do not have to commute all of your benefits from all of your registered pension schemes. However, benefits that are part of the same registered pension scheme must be taken at the same time.)
- The value of your funds from all your registered pension arrangements are not worth more than 1% of the Standard Lifetime Allowance (SLA) at the Nominated Date. (This DOES include all benefits which have been contracted-out with a pension provider. This does NOT include any benefits under the Basic State Pension OR the State Second Pension (S2P), formerly called the State Earnings Related Pension Scheme (SERPS) which will be paid by the state, any widow(ers), civil partners or other dependant’s pensions.)
For Independent Financial Advice on Triviality Rules or Annuity and Income Drawdown Advice, call Independent Financial Advisers, Retirement Solutions on freephone 0800 043 6701