Take your pension as a lump sum

Even if you are already receiving your pension, you may be able to receive payment of all of your pension rights as a one off lump sum. This is called trivial commutation.

The rules and criteria about trivial commutations are different if your pension is not yet in payment. See taking your deferred benefits for more information.

Things to consider

Before deciding whether to take a lump sum payment from your pension, you should consider whether this is your best financial option.

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

you will no longer receive monthly pension payments
we will have no further 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 survivors pension
you should ensure you have sufficient funds to see you into your old age

We are unable to provide advice but suggest finding an independent financial advisor or getting free advice from Money Helper. You should also be wary of anyone that urges you to take a trivial commutation and invest it somewhere else. This is often a scam. Find out how to spot scams.

Eligibility

Trivial commutation may be available to pensioners, pension credit members and those receiving a survivor/dependant’s pension. However, to be able to receive your pension as a lump sum, you must meet certain criteria set by the government.

See the circumstances below to check if you are eligible.

If you are a pensioner member or a pension credit member, you may be able to trivially commute if:

the total pot value of your pension in registered pension schemes is less than £30,000 (including your LGPS pension(s) held at Buckinghamshire, any other LGPS pensions held at other funds, as well as all other private, personal, or occupational pensions)
you either left the scheme after 31 March 2008, or were awarded a pension credit after 1 April 2014, and your total LGPS trivial commutation payment before tax is less than £10,000, even if the total value of your pension rights in registered schemes exceed £30,000

To check whether you meet one of the criteria, you will need to provide us with an official letter showing the value of any other pensions you hold outside of LGPS. Otherwise, you will need to confirm that you do not hold any other pensions.

If you are receiving a survivor or dependant's pension from us, you can trivially commute your pension if the total pot value of all your LGPS pension rights is less than £30,000.

This includes any other LGPS rights held in other funds. This total does not include any pension rights held in registered pension schemes outside of the LGPS.

If you hold other LGPS pensions, you must trivially commute these at the same time

How we work out the value of your pension pot

To check whether you meet the criteria to trivially commute we will need to calculate the pension pot value of your LGPS pension.

If your pension was put into payment before 6 April 2006

If your pension was put into payment before 6 April 2006, we do this by multiplying your annual pension (before tax) at 5 April 2006 by 25. Any tax free cash you received before this date is not included in the calculation.

e.g. £1,250 (Annual pension) x 25 = £31,250.

In this example, trivial commutation is not possible as the pension pot exceeds £30,000.

If your pension was put into payment on or after 6 April 2006

If your pension was put into payment on or after 6 April 2006, we do this by multiplying your annual pension (before tax) by 20.

e.g. Annual pension: £750 x 20 = £15,000

In this example, trivial commutation is possible as the pension pot value is less than £30,000.

How much you will receive

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

Calculating the actual trivial commutation payment is complicated. We work out the payment using factors issued by the Government Actuary 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. Generally, a certain amount will be taxed at 20%, and anything exceeding that amount will be taxed at 40%.

How to apply

If you think you may be eligible to take a one-off lump sum from your pension, contact us. We will provide you with an estimate of how much the payment will be.

If you do not wish to proceed once we have given you the figure, you don't have to and we will continue paying you your pension as usual.

Unauthorised trivial commutations

It is important that you tell us about any other pension rights that you hold outside of the LGPS.

If you take a trivial commutation incorrectly, perhaps because you had other pension pots that took the total value of your pension rights over £30,000, you could be liable to pay a penalty tax fine from HMRC.

Contact us about your pension

Details of how to Contact us about your pension

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