Taking all your pension as a one-off lump sum (trivial commutation)

Taking all of your pension as a one-off lump sum is called ‘trivial commutation’. The government sets strict rules about who can trivially commute their pension and it is generally only available for small pension pots.

The eligibility criteria for trivial commutation is different, depending on whether you are currently paying in, have deferred benefits or are receiving a pension.

However, in all cases if you paid into the LGPS before 6 April 1997, you must be at least age 60 for a woman and 65 for a man to be eligible for trivial commutation.

If you paid into the LGPS on or after 6 April 1997, you must be at least age 55 to be eligible for trivial commutation.

You may also be able to trivially commute at any age if you are retired due to ill-health.

If you are currently paying in and are considering retiring and taking your pension, you may be eligible for trivial commutation when you leave as long as:

• you trivially commute all of your LGPS pensions at the same time
• any trivial commutation payments you received from other pension schemes were paid to you in the last 12 months (unless you received them before 1 April 2006)
• you have not used up all your Lump Sum Allowance

In addition to this initial criteria, either:

• the value of all your pensions, including those outside of the LGPS apart from State Pension, cannot be more than £30,000

or, if you are receiving a trivial commutation payment from the LGPS only:

• the value of all your LGPS pension benefits, including those held outside of Buckinghamshire Pension Fund, is less than £10,000
• you have not transferred any pension out of the LGPS in the last three years, and
• you are not a ‘controlling director’ or someone connected with a ‘controlling director’, of an LGPS employer.

To check your eligibility, we will need details of your other pension pot values held outside of the LGPS. You will need to request this directly from your other pension providers.

To check whether you meet the criteria for trivially commuting your pension we will need to work out the pension pot value of your LGPS pension. This is not the same as your annual pension and is calculated as:

You may need the value of your pension pot, or the amount of lifetime allowance your pension uses up.

If you want to know the value of your pension pot, you can ask us for this.

The pension pot value is not the amount you will receive.

Calculating the trivial commutation payment is complicated. We work out the payment using factors issued by the Government Actuary’s Department (GAD) which are based on your age and the value of your pension.

Income Tax will also be deducted from the amount you receive. If you're yet to receive payment of your pension, you will usually be able to receive 25% of the trivial commutation payment tax free. The rest will be subject to Income Tax.

If you ask to receive your pension when you leave your employment, we will confirm your eligibility for a trivial commutation in your in your retirement pack. If you want to look into the trivial commutation, you should review the eligibility criteria and contact us if you think you qualify. We can then give you an estimate of the final lump sum amount you could receive. You will be under no obligation to take the trivial commutation payment at that stage.

More information about tax on trivial commutations is available in the HMRC Pensions Tax Manual. 

Before deciding whether to take a trivial commutation payment, you should consider whether this is your best financial option.

Taking your pension as a one-off lump sum means that:

• you will not receive monthly pension payments
• we will have no liability for you in the LGPS
• if you were to pass away before your spouse, civil partner or cohabiting partner, they would not receive a survivor's pension

View more information about trivial commutations on the MoneyHelper website.

Deciding how you would like your LGPS pension paid is a very important decision.

We recommend getting guidance or independent financial advice where possible.

Get help with decisions about your pension.