Various restrictions on trivial pension commutation are imposed by the pension taxation regime and contracting out legislation. The scheme administrator should ensure that the payment of a lump sum in lieu of a small pension is compliant with these as well as with the scheme regulations.

The lump sum payable in respect of commutation of a trivial pension (in addition to any other lump sum due) should be determined as follows:

Total pension amount x factor

Where:

The Total pension amount is the pension that would otherwise be put into payment if trivial commutation were not to proceed. Therefore, this pension is the pension after any reduction due to commutation for tax free cash, if relevant.

The factor should be determined from the relevant table (Table A1, Table A2 or Table A3) which can be found in the Consolidated Factors Workbook, as applicable for the member's age (in completed years) and status at the date of commutation. The factors apply to both males and females.

Status refers to either "former contributing member" (Table A1), "dependant" (Table A2) or "pension credit member" (Table A3).