Non- Pensioners

Taking a small pension as a lump sum

If your pension is smaller than a certain level, you may have the option of giving up your future income and taking a lump sum instead.

To do this, all your UK registered pensions added together must be equivalent to less than £30,000 as a lump sum. This doesn’t include your State Pension or any pensions you receive as a spouse, civil partner or dependant of a deceased pension scheme member. We’ll ask you to complete a declaration telling us about all your pensions.

Taking the whole of a small pension as a lump sum is sometimes called ‘trivial commutation’. The lump sum is sometimes called a trivial commutation lump sum.

In most cases you would get the first quarter of your lump sum free of tax. The rest would be taxable like income.

The earliest you can do this is normally age 55.

If you want to take more than one small pension as a lump sum, you have to take them all within 12 months. You must have enough Lifetime Allowance available to receive the lump sum.

You can find out more by reading the Trivial Commutation Explanatory Leaflet.