RPSM09105060 - Technical Pages: Member benefits: Lump sums: Trivial commutation lump sum: Example 2 - payment of a trivial commutation lump sum
If the lump sum was paid on or after 6 April 2011 you should first read RPSM09105085.
Payment of a trivial commutation lump sum: Example 2
Catherine has uncrystallised benefits held under scheme A, B and C worth £2,000, £2,000 and £5,000 respectively on 1 January 2011. She is also in receipt of two pensions from other registered pension schemes, which are relevant crystallised pension rights, as follows.
- From scheme D, a pension of £2,000 per annum, which started in 2001 at the rate of £1,200 per annum and was payable on 5April 2006 at the rate of £1,500 per annum, and
- From scheme E, a scheme pension of £900 per annum, which started in the 2007/08 tax year at the rate of £700 per annum. At the same time the scheme pension started Catherine was also paid a pension commencement lump sum of £2,000.
Catherine’s uncrystallised rights are valued at £9,000. Her relevant crystallised pension rights are valued as follows
Scheme D - £45,000 (see RPSM09105020 for details of calculating this value)
Scheme E - £18,000 (see RPSM09105000 for details of calculating this value)
This means Catherine’s total pension rights are worth £72,000 (£9,000 + £45,000 + £18,000) on 1 January 2011). This is more than the commutation limit of £18,000 at that time (1% of the standard lifetime allowance of £1.8 million for that tax year).
So none of Catherine’s benefits under scheme A, B or C may be commuted and paid as a trivial commutation lump sum. Nor can her pensions in payment be commuted.