People with several small occupational pensions should be able to group them together for trivial commutation, says Hargreaves Lansdown head of pensions research Tom McPhail.
Under current rules, if the sum of an individual's pension funds is less than £18,000, it is considered ‘trivial', and if the individual is aged between 60 and 75, the money can be 'commuted' or withdrawn. Most of that sum would be taxed at 20% as income, whilst 25% would be tax free. Additionally, there is another trivial rule for ‘stranded' occupational pension pots, which can be withdrawn as lump sums if they are less than £2,000. McPhail, who is also the chairman of the Pensions Income Choice Association (PICA), says the system needs to be simplified to improve consumers' acces...
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