What other commutation options are available?
These will depend on the type of scheme.
If a member of a DB scheme is retiring over age 55 (or earlier on ill-health grounds) they may be able to take a Trivial Commutation Lump Sum (TCLS) if the value of their pension savings across all pension arrangements is £30,000 or less.
For an Occupational Pension Scheme, a member may be able to take the whole of the pension in that scheme as a small pot if the value does not exceed £10,000.
For Personal Pensions, a member can have three small pots each of up to £10,000.With these options, the first 25% is tax free but income tax is paid on the remaining 75%.
If the member is already in receipt of a pension and decides to commute it for cash, they should be made aware that the whole lump sum is taxable.
