Cashing in small pensions

If you have a small pension you may be able to cash it in and exchange it for a final cash lump sum called a ‘trivial commutation’.

Members with very small pensions have the option to exchange them for a one off taxable cash payment, known as 'trivial commutation', provided that they meet certain qualifying conditions which are specified by HM Revenue and Customs (HMRC).

There are two different commutation options:

The first option applies if you receive a pension of less than £10 per week and are over age 55. To qualify for trivial commutation on this basis, you must have less than £10,000 of MPS pension savings. As a guide, this is broadly equivalent to a pension of £10 per week or less.

The second option has a greater number of qualifying conditions, which again are specified by HMRC.

These qualifying conditions are:
  1. You must be aged over 55
  2. The value of all your pension arrangements (ignoring any State Pension) when added together must not exceed £30,000 in total. As a guide, this is broadly equivalent to a total pension of £29 per week;
  3. If your pension contains a GMP element then you will not be able to apply for trivial commutation until you reach your GMP payment age (which is 65 for men and 60 for women); and
  4. If you have already trivially commuted any pension benefits from another arrangement and did so more than 12 months ago (unless the previous payment was made before 6 April 2006), you will not be able to apply for trivial commutation. 
If you would like to know more about either of the commutation options please contact the Scheme Administrator.