Trivial Commutation of Pension.

[SlurrySlump]

My wife worked for the Ulster Bank for circa two and a half years. Her annual pension based on her contributions will be €125 per annum. She has written to the Ulster Bank who state that this amount exceeds the limits set by the revenue for trivial commutation.
Rather than take €125 per annum she would like to cash in the pension and take it all in cash as a lump sum.
Trying to understand the rules of Trivia Commutation is very difficult. Is there any one out there who might explain how this works in Ireland. I read somewhere that if your pension is under €330 per annum then this could be cashed in and taken in a lump sum?

 

[Baracuda]

Hi SlurrySlump

Has she any other pension benefits from any other sourse? as the quantum of all pension funds after tax free lump sum must be less than €20,000 in the case of a private pension or €330 before tax free cash in the case of a DB/DC scheme.

The trustee's of the scheme are not obliged to operate the trivial pension rule if they do not wish.

I assume that she was part of the Defined Benefit Scheme. The Defined Benefit commutation factor used varies from scheme to scheme. I think the CS/PS scheme uses a factor of 9:1 likewise the private sector scheme that I am a member of uses the same.

So maybe perhaps the UB CF is similar so if you were to base your wifes annual pension on this CF she would receive a lumpsum before tax @ 10% of €1125.

Hope this helps your understanding,

Baracuda.

 

[pierboy]

Important to realise that the trivial rules only apply on retirement. Your wife won't be allowed retire before 50 by Revenue unless she is very seriously ill i.e. normally she cannot access her fund until then. Revenue will though allow immediate payment earlier than 50 if the scheme is winding up.