Ah, Triviality and Pensions Simplification. ‘A-Day’ for pensions, the 6th April, 2006, brought about a lot of changes in the pensions industry…in an attempt to simplfy matters. This item deals with ‘Triviality’. This is the name given to the opportunity to give up pension rights in exchange for a lump sum and the limits that apply. This option is only possible, in the 2008/2009 tax year, where the total of all your pension rights does not exceed 1% of the Lifetime Allowance, that’s 1% of £1.65m, £16,500.
There are some complicated calculations involved in working this out in respect of: pension rights not yet in payment, pensions already in payment before 6th April, 2006, and pensions put into payment after that date, and advice should be taken. The option to take a cash payment instead of pension rights must be taken between the ages of 60 and 75. A quarter of the amount is classed as a tax-free lump sum, the balance is treated as taxable income in the year it is taken.
