Regulations have been laid earlier this year extending the facility enabling small
“stranded” pension pots to be commuted on the grounds of triviality to include personal
pensions. This extension takes effect from 6 April 2012 and means that if you have a small pension fund you can take the fund as a lump sum rather than use it to buy an annuity (fixed income for life).
In order to take advantage of this the scheme rules must allow it and the following
conditions must be met:
• member has attained age 60
• the funds in the personal pension arrangement must not exceed £2,000
• the payment extinguishes the member’s entitlement under the arrangement
• only 2 such commutations are possible in a member’s lifetime.
Please note that these payments take no account of the level of pension savings the
member has elsewhere and are in addition to any trivial commutation lump sum payments and
any commutation of small pots payable from occupational pension schemes.