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MyCompanyPension.co.uk - Helping members of occupational pension schemes to better understand their benefits.
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:: Blog | September 2008 (5 blogs) | There is nothing trivial about a pension
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There is nothing trivial about a pension
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Here’s an interesting comment: 'According to figures from the Association of British Insurers there were more than 102,000 pension annuities sold with a value of less than £5,000 last year.’
Why is this important? Well at the moment a person with total pension funds of less than 1% of the Lifetime Allowance (currently £16,500 at the date of writing) can take all of the pension fund as cash (subject to tax). These are called trivial pensions. But there is an amendment going through Parliament which would permit Trustees with members with small pension pots, for example under £2,000 to pay out the benefits in cash.
This would be particularly useful for both the scheme members and for pension schemes (the latter would obviously save through having to administer and payout small pensions on ‘trivial’ funds).
According to John Lawson, head of pensions policy for Standard Life "We are trying to make it easier for people who have little bits of money. You may get around £120 a year from a pension pot worth £2,000, which is £10 a month." See:
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Mike Jones, MyCompanyPension.co.uk, 25th September 2008
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