4. Triviality Commutation Cash In Rules Death Survivor Benefits

Published / Last Updated on 04/03/2022

We have already covered triviality commutation for cashing in small pensions pots (private pensions and money purchase), defined benefit pension schemes and triviality on winding up/closing down occupational pension schemes.

Small Pension Cash In  Trivial Pension Cash In  Trivial Pension Wind Up

Triviality rules can also be used on your death where your defined benefit or defined contribution/money purchase occupational pension scheme is being paid out to a surviving spouse or beneficiary.

Trivial Lump Sum Rules on Death:

  • The beneficiary must be entitled to a small dependant's/survivor's pension, or the remaining instalments of a deceased’s pension paid within the guarantee period (usually 5 or 10 years) under a lifetime annuity or scheme pension.
  • The triviality commutation (cash in value) limit is £30,000.
  • There must be no remaining benefits or rights in the scheme due to the deceased member.  By receiving a survivor lump, all deceased’s rights inside the pension disappear/are extinguished.
  • Lump sum death in service/life insurance benefits due to the deceased’s beneficiaries (in trust) or estate (if not in trust) are ignored.
  • The values of the surviving beneficiary’s own pension schemes are ignored.
  • There is no minimum age for you to be able to cash in/commute a death/survivor lump sum.
  • The survivor's triviality rules can also be used where Guaranteed Minimum Pension (GMP) and/or section 9(2B) rights are involved (this is all to do with contracting out of SERPS or State Second Pension).

Lifetime allowance (the maximum you can accrue in pensions throughout your lifetime) – A trivial commutation lump sum death benefit is not a benefit crystallisation event and taking benefits in this way does not use up either the deceased member's or the beneficiary’s lifetime allowance.

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