New Rules on "Triviality"

The triviality rules, in force since 6 April 2006, allow you to cash-in small pensions. In 2009/10 you must be between 60 and 75 and the total value of all your private pensions must be under £17,500. It is not a "per pension plan" limit.

Some people have pensions that are too small to convert into annuities but are unable to encash them as they have other pensions valued at more than £17,500.

To solve this problem a rule change will allow occupational pension scheme members to encash small pensions, even where they have total pension values of more than £17,500. This new rule will not apply to stakeholder or personal pension plans, or SIPPs.

The conditions for this new rule are:

• The payment must be under £2,000;
• You must be aged between 60 and 75;
• You must not be a controlling director of the sponsoring employer;
• Your rights to scheme benefits are extinguished;
• There must not have been a transfer out of the scheme in the 3 years before the date of payment;
• The first 25% of the payment is tax-free, with the remaining 75% taxable under PAYE.