If the pension you have built up in the Local Government Pension Scheme (LGPS) is small, you might be able to take it all as a one-off lump sum instead of a monthly pension. This is called a trivial commutation.
The rules for this are quite detailed. In general, you must be at least 55 years old when you leave the scheme (increasing to 57 from 6 April 2028). Even if you meet the minimum age, you may still not qualify, so the Fund will always check your eligibility. Please also be aware that 75% of any lump sum you receive is taxable.
You may be able to take a trivial commutation, under one of the options below.
LGPS pension only
Where the value of all your LGPS benefits in England and Wales as a trivial lump sum doesn’t exceed £10,000 in total.
If you would like to take a trivial payment of LGPS pension only, the following needs to apply:
- You left the scheme on or after 1 April 2008
- You are aged 55 or over, or if you have scheme membership before 6 April 1997, age 60 for a female or age 65 for a male
- The value of your LGPS benefits must include any benefits you have in other LGPS funds in England and Wales
- You have not transferred any benefits out of the LGPS in the last 3 years
- If you left the pension scheme before 1 April 2014, you must not have received a transfer into the scheme during the 5 years preceding the date of the commutation payment
- You must have some available lump sum allowance
More than one pension scheme
Where the value of all your pensions across all providers (excluding your State Pension) doesn’t exceed £30,000. If you choose this option, you must take all of your trivial commutation (lump sum) payments from both the LGPS and any other providers within 12 months of the first payment.
If you would like to take a trivial payment of both LGPS and any other pensions, the following needs to apply:
- Age 55 or over, or if you have scheme membership before 6 April 1997, age 60 for a female or age 65 for a male
- Any trivial commutation payments you received from other pension schemes were paid to you in the last 12 months (unless you received them before 1 April 2006)
- If you have an ongoing pensionable employment, trivial commutation is not an option
- You must have some available lump sum allowance
Other things to consider
Before deciding to take your pension as a single lump sum, think carefully about whether this is the most suitable financial option for you.
If you choose a trivial commutation:
• You will not receive any monthly pension payments
• The Fund will no longer hold any liability for you in the LGPS which means you will not be entitled to any further benefits from the scheme
• Your spouse, civil partner or cohabiting partner, will not receive a survivor’s pension when you die
You should review the eligibility criteria and contact us if you would like to consider this option.
You may also want to seek independent financial advice before making your decision.