3. Triviality Commutation Cash In Rules for Pension Winding Up
Published / Last Updated on 03/03/2022
We have already covered triviality commutation for cashing in small defined benefit pension schemes. Watch: Trivial Pension Cash In
- What if your old company pension scheme is being closed down or wound up?
- What if your old company pension pot is small?
Triviality rules can be used where your defined benefit or defined contribution/money purchase occupational pension scheme is being wound up.
Winding Up Trivial Lump Sum Rules:
- The company pension scheme must be winding up i.e., closing completely and all fund assets paid out.
- The triviality commutation (cash in value) limit per scheme member is £18,000.
- The value of your other pension schemes can be ignored.
- There is no minimum age for you to be able to cash in/commute a winding up lump sum.
- By receiving a wind-up lump, all your rights inside the pension disappear/are extinguished.
- If your employer/former employer paid into the scheme for you within the last 5 years, the employer cannot make contributions to any other registered pension for you and confirm with HMRC that it will not make any contributions to any pension scheme at all for at least 1 year after wind-up.
Lifetime allowance (the maximum you can accrue in pensions throughout your lifetime) – you must have some remaining lifetime allowance to able to use Triviality Commutation on Winding Up, but any lump sum paid out to you does not use up that same lifetime allowance.
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