From age 55 onwards, if your benefits are valued at less than £10,000, you will be able to exchange all your benefits for a cash lump sum. A proportion of this will be paid to you as a tax-free lump sum and the remainder would be taxed under PAYE at your marginal tax rate. Please let us know if you would like to find out if you are eligible for this option.
If your benefits are valued at less than £30,000, you may be able to exchange all your pension benefits for a cash lump sum, also known as ‘trivial commutation’. To do so, the total value of all your private pensions, excluding the State pension, would need to be less than £30,000.
Under trivial commutation, you would exchange all your benefits, including the contingent spouse’s pension, for a lump sum, a quarter of which would be payable tax free, with the remaining three-quarters taxable under PAYE.