RPSM09104920 - Technical Pages: Member benefits: Lump sums: Trivial commutation lump sum: What pension rights are measured against the commutation limit

If the lump sum was paid on or after 6 April 2011 you should first read RPSM09105085.

What pension rights are measured against the commutation limit

The member’s crystallised and uncrystallised rights are referred to in the legislation in this context as the member’s ‘relevant crystallised pension rights’ and ‘uncrystallised rights’ respectively.

The combined value of those rights is referred to as the member’s pension rights.

These are what are valued on the nominated date and compared to the commutation limit.

RPSM09104980 to RPSM09105030 explain how these respective values are calculated. But the valuation of the pension rights includes the individual’s benefit entitlements, past and present, including all amounts crystallised previously for lifetime allowance purposes in respect of that individual under all registered pension schemes. Whilst any earlier BCEs will in all likelihood relate to the payment of benefits and the commencement of a pension entitlement, they may not do - for example, where a transfer overseas occurs that is caught by BCE 8.

The measure should also include any entitlements/rights held under any registered pension scheme payable on the member’s death to any dependants of that member (which must also be commuted at this time - see RPSM09104930). These are valued on the basis set out in paragraph 9 of Schedule 29, Finance Act 2004 (see RPSM09105030).

Any rights that were commuted on grounds of triviality before 6 April 2006 are not included in this measure.

Any small lump sum that was paid before the nominated date (see RPSM09104950) is not included in the member’s relevant crystallised rights.