(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
[PN8.15]
Deferred benefits may be commuted when they first become
payable or on the winding-up of the scheme. If the benefit has been
increased during the period of deferment the triviality test is
applied to the whole increased benefit and not the original benefit
given on leaving service. Deferred benefits secured by an annuity
contract or policy bought in the name of the employee or assigned
to the employee on winding-up or after leaving service may be
commuted on grounds of triviality only if the Life Office has made
satisfactory arrangements to account for tax due under section 599
ICTA 1988 (see
PSI17.2.23). This principle
also applies where a pension credit benefit for an ex-spouse are
secured under an annuity contract or policy (see
PSI24.1.11).
