RPSM09105085 - Technical Pages: Member benefits: Lump sums: Trivial commutation lump sum: Payments from 6 April 2011
Trivial commutation lump sums paid from 6 April 2011
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When a trivial commutation lump sum is paid on or after 6 April 2011, the rules set out in RPSM09104905 to RPSM09105080 still apply but with the following amendments:
Amendments effective from 6 April 2011
- A lump sum can be paid to a member aged 75 or over so any reference to the lump sum having to be paid before age 75, e.g. at pages RPSM09104905 and RPSM09104910, can be ignored.
- A pension in payment can be commuted after age 75 so references to the contrary, e.g. at RPSM09104910, can be ignored
- The member must have lifetime allowance available at the point the payment is made (for example, see the guidance under the sub-heading “Lifetime allowance” at RPSM09104910). Where the lump sum is being paid after age 75 from uncrystallised rights or funds, those rights or funds will have been tested against the member’s lifetime allowance under BCE 5 or BCE 5B respectively when the member reached age 75. This BCE will have used up some or all of the member’s available lifetime allowance at that time. So, solely for the purposes of deciding whether the member satisfies the condition that they have available lifetime allowance, the fact that a BCE 5 or 5B has occurred is disregarded. This means that any lifetime allowance used up by that BCE does not count in calculating whether the member has available lifetime allowance. On the other hand, if the member has already taken benefits from the same or another arrangement under a registered pension scheme after reaching age 75 or some other event has occurred that would have been a BCE but for the fact that the event occurred on or after the member reaching age 75, then, again solely for the purposes of calculating whether the member has available lifetime allowance, those events are treated as though they were BCEs.
Amendments effective from 6 April 2012
The maximum lump sum that can be paid is not expressed as a percentage of the standard lifetime allowance but as a fixed amount, set at £18,000. So any references to the maximum that can be paid should be read as £18,000 rather than 1% of the standard lifetime allowance. So, for example, the guidance under the sub-heading “Commutation limit” at RPSM09104910 should be read as “The commutation limit is £18,000”.