trivial payment

A question about : trivial payment

My pension provider cis has told me I cannot take my pension for which I opted out of serps as a trivial payment as I am already in receipt of my voluntary contributions part of my pension plan. It wasn't made clear to me when I took out the pension that I couldn't have a lump sum payment if I was already in receipt of my voluntary part of the plan. I therefore have to make do with getting Ј36.99 a month. What use is that when my utilities are Ј157 a month. Trying to make sense of the legal jargon is impossible for the layman. I took my case to the financial ombudsmen, but the adjudicator found in favour of cis, so I have referred it to the ombudsmen. I have to let them know before 8th September if I have any relevant information for my case. Can anyone help with advice?

Best answers:

• You need to provide more details. How old are you and when did you claim for triviality payment?
  What type of pension is this? Personal pension, Section 32 etc?
  What other pensions did you have (give approx fund values)? How much was this pension in question worth?
  By "voluntary contributions" part of your pension, did you mean AVCs?
  Ignore the state pension stuff for now please.
• I am 63 & applied Dec 2013 for a triviality payment. It is a private pension and the other one I receive ,voluntary contributions fund is worth Ј8000 & the contracting out part is worth Ј8500 .It is not avc.
• I am already in receipt of it as a lifetime pension of Ј36.99 per month. The problem I have is that I wasn't told when I took it out that I couldn't claim it all as a lump sum.This is why I took it to the ombudsmen.
• No I did have an advisor but it's so long ago the only thing I remember him saying is to take out my work pension and cash in the other cis pension I had,which I did.
• So are you actually saying that you have taken an annuity with CIS but that you are now trying to get the fund paid out as a lump sum instead?
  If so the money has already been used to purchase an annuity. This is where the Ј36.99 comes from.
• My interpretation is that there are 2 pots. One of these pots is currently being paid. Because you are receiving an annuity from the scheme, they've said you cant take the other pot as a lump sum and have given you an annuity quote of Ј37 per month. Is my interpretation correct?
  Believe it or not, you may in fact have a case BUT you would need a copy of the original information from when you joined the scheme.
  Legislation states that in order to qualify for a trivial commutation payment, the payment must extinguish all rights to the scheme.
  This criteria may not have been well communicated. If it wasn't well communicated AND this specific "extinguishing" criteria is their only reason for their refusal to pay the money as a trivial commutation payment AND the terms and conditions of the scheme aren't clear on the trivial commutation rules of the scheme in relation to the "extinguishing" point, then you might have actually have a case.
  HMRC rules state that if the scheme were to give you the money as cash despite you having an ongoing annuity with them bought from a different pot, a cash lump sum payment wouldn't be treated as an unauthorised payment (subject to various conditions, basically in line with trivial commutation rules with a few other ones) https://www.hmrc.gov.uk/manuals/rpsmm...sm09105460.htm. A scheme doesn't have to do this, hence why the T&Cs are important.
  To put it another way, if the scheme t&cs don't specifically state anything about the extinguishing rule AND the communications implied that you would be able to take the money as a cash lump sum if below the limits and didn't specify or explain the the extinguishing point, then there is a strong argument that the scheme should pay it to you under the HMRC rule above.
  However, with all that said, I've made a huge number of assumptions in this post, which may or may not be correct and it is not a substitute for legal advice. I am not a lawyer.
• If you don't win on 8th Sept, at least get an open market annuity quote. Good luck
• It's not clear enough yet just what you have and what you did and that makes it hard for us to be sure that we are telling you the correct things.
  You've mentioned what could be three different pensions:
  1. A "voluntary contributions part"
  2. Voluntary contributions are normally AVCs and linked to a defined benefit pension like final or average salary. Do you have one of these that was connected to the voluntary contributions?
  I assume that those two are the "work pension".
  3. The contracted out of SERPS money.
  4. The annuity that is paying Ј36.99.
  I assume that this is the "other" CIS pension.
  Quote:
• Sorry I haven't replied recently but I have been ill and will read the posts as soon as poss. Thanks for all your help.
• I have a copy of the letter sent by cis which states because the voluntary part of my pension plan is already in payment, under the rules of triviality I am not eligible to claim the rebate part of my policy as a trivial payment.
• I cant see anything in this thread that suggests he was mislead.
  One part of the pension is being paid under an annuity. it is an in-house annuity which suggests advice was not sought or given (unless there is a GAR, which there often is with CIS pensions). The other part has yet to commence. However, triviality cannot apply due to the one already in payment and potentially the amount (but we are still lacking so many facts).
  The easiest solution of all is to wait until next April as triviality will be abolished at that point and the new rules will allow lump sum.
• Why do you think that having an annuity in payment can block either trivial commutation or a transfer out?
  The only combination I can think of with that result would be them both in the same arrangement and I don't think that it's possible to have both lifetime annuity and uncrystalised funds in the same arrangement.
  So far I see nothing that could cause "triviality cannot apply due to the one already in payment" to be true. So what am I missing?
  Agree about lacking many facts but so far as we know the total value is under Ј18,000 so eligible for triviality.