# Trivial Pensions



## JackKilkenny (28 May 2019)

Hi there, I was hoping for some clarity on Trivial Pensions that the revenue tax manual doesn't seem to answer. I have two small pensions with two different companies that I want to tidy up now I'm over 50. They are two separate companies with no linkages, each had separate employments re myself. One is eligible for a trivial pension at 10% tax as it's only 12k, and the other is for around 50k which I want to take 25% tax free and put the rest on an AMRF. Since they were both separate employments and separate funds, my reading of the tax manual is I can do this and that both aren't taken into account for 10% tax trivial purposes on the 12k. I do know there's a 30k all pensions limit on the other trivial redemption option but since both are separate companies and are dissolved I think I'm ok to do the trivial tax redemption on one and not affect the other re 25% tax free lump sum etc. I haven't got a straight answer from the pensions board so I'd appreciate any help, thanks


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## Steven Barrett (28 May 2019)

If after taking the maximum tax free lump sum, the balance of your pension fund is less than €30,000, you can take this remainder as a once off payment. All of your pension benefits must be taken into consideration in this situation, so if you have two small pensions totalling more than €30,000 together, you cannot avail of this option.









						Trivial Pensions - Bluewater Financial Planning
					

There are circumstances where people have relatively small pension plans when they get to retirement that will only pay them a pittance each year. To avoid that, the Revenue allow what is called a “trivial pension” ie the pension is so small, they let you cash the whole lot in. There are two...




					www.bluewaterfp.ie
				




Steven
www.bluewaterfp.ie


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## JackKilkenny (29 May 2019)

Thanks for the reply and help Steven, I really appreciate it. I know where you're coming from re the 30k criteria but in the Pensions Manual from Revenue, the first section of paragraph 7.4 on Trivial Pensions states that the 10% option relates to a particular scheme related to a particular employment and not total employments. Further on it describes another option re the total of all pension benefits for the 30k limit and then taking the one off lump sum subject to tax, USC etc. There's definitely an impression that there are two options from the manual and one option takes each employment individually for the 10% tax whereas the other uses the total of all pensions for a different calculation. What do you think? Jack


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## Steven Barrett (29 May 2019)

The 10% taxation applies to pension annuities of €330 per annum or less. The €30,000 amount is a different rule. You can't cherry pick the best bits of each. Your reading of the Revenue rules is incorrect and my original post stands. 

The blog post I wrote on it was sourced from the Revenue rules. 

Steven
www.bluewaterfp.ie


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## JackKilkenny (29 May 2019)

I don't wish to pick and choose the best bits of each, I want to pick the 10% tax option for one employment pension and for the other separate employment pension that's with a completely different employer I do not wish to cash in all of that, just take the 25% you are allowed and leave the balance roll on in an AMRF. I still don't see in that section 7.4 where this strategy is disallowed. Jack


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## elacsaplau (29 May 2019)

Hi Jack,

I had a gawk at the Revenue Manual. My reading is that your interpretation is correct in that the €330 rule is distinct from the €30k rule. However, you still may not be allowed to do as you wish for two reasons.

1. The smaller pension fund can only be taken at normal retirement age......I'm guessing you are a bit away from this?

2. €12k is too much!! Non-escalating single life annuities are probably of the order of 4% so your "fund" is greater than the allowable threshold (i.e. €12k * 0.04)


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## JackKilkenny (29 May 2019)

Thanks for that Steven, I appreciate you taking the time in replying to me. I think I'm ok on your first point, the scheme allows for payout when I'm over 50 plus the scheme and company are now wound up/closed etc. but I'll have to check your second point, that may catch me out. I'll post back with the answer in case this example will help others,  thanks again


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## elacsaplau (29 May 2019)

Hey Jack!

(a) I'm not Steven

(b) _if_


JackKilkenny said:


> ….the scheme and company are now wound up/closed



how can



JackKilkenny said:


> the scheme allows for payout when I'm over 50 plus




In any event, it's not whether the scheme allows early access to the funds.....the point is:
_"Where a trivial pension is a deferred pension, it may not be commuted until it begins to be payable."_

This means normal retirement age! albeit sloppily worded!!


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## JackKilkenny (29 May 2019)

Apologies elacsaplau, I wasn't concentrating there when reading, thanks for replying. Ok I see what you're saying but I must be lucky with the Directors pension I had because Aviva have sent the Trivial Pension forms to complete and I've confirmed with them that I can access the fund now that I'm over 50 for the payment. The issue I was left with was the other pension and could I get the 25% tax free lump sum on that and roll the balance on for an ARMF. I've since got confirmation today from Revenue that there's no conflict so I'm pretty happy my interpretation was ok. Just to be clear, I wasn't trying to cash in both pensions, just one. The other one I was happy with the 25% lump sum only.


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## elacsaplau (29 May 2019)

Hi Jack,

I hope it goes to plan for ya! [……..Maybe Aviva will realise that the smaller pension can't be "trivialised" (under Revenue's rules) upon receipt of the forms, maybe not! You correctly read the Revenue manual earlier...…..so you'll appreciate that there's no way the €330 p.a. cap is not being breached here!!]

Anyway, hope it works out for you!


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## JackKilkenny (30 May 2019)

Thanks elacsaplau, hopefully it'll all go ok. Aviva have worked out the annuity at 151pa (single life, gross, 5 year guaranteed period, 1.5%pa escalation etc.) so I'm trusting they have their figures sorted. Thanks again, Jack


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## GSheehy (31 May 2019)

JackKilkenny said:


> Aviva have worked out the annuity at 151pa (single life, gross, 5 year guaranteed period, 1.5%pa escalation etc.) so I'm trusting they have their figures sorted.



I'd suggest that you get whoever is dealing with this for you in Aviva to get them to run it by pensions technical services. The manual is very specific about "...._ the calculation should be based on the cost of a single life annuity with no escalation." _and yet they've included it in the quote. Adding 'bells and whistles' like escalation has the effect of reducing the annuity rate.

€12,000 for a male 50 year old will currently buy an annuity with Aviva of €299.96. A 51 year old is €307.58


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## elacsaplau (31 May 2019)

Hi GSheehy,

Does the normal retirement obligation not apply?


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## GSheehy (31 May 2019)

My understanding is that it doesn't in this case.


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## elacsaplau (31 May 2019)

Thanks GSheehy

I trust your expertise in this but doesn't the Renevue manual suggests the opposite?


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## GSheehy (31 May 2019)

What text are you referring to?


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## elacsaplau (31 May 2019)

elacsaplau said:


> _"Where a trivial pension is a deferred pension, it may not be commuted until it begins to be payable."_



I think this means that you have to wait to normal retirement age! It certainly what Steven believes also - per his blog per post 2 above!!


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## GSheehy (31 May 2019)

Triviality does not have any age limits, only for the one that you must be eligible to draw down your benefits.

 So, early retirement can start from age 50.

The part quoted 'until it begins to be payable' means when the client draws down/matures the pension.

If you're self-employed with a PPP or PRSA,  you're stuck with age 60


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## elacsaplau (31 May 2019)

Hi GSheehy,

I now agree with ya! (...…….slow learner here!).

If we is right, Steven may need to look at his blog!?


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## JackKilkenny (11 Jul 2019)

Hi All, just to say that all went according to plan with Revenue and Aviva, trivial pension processed as I'd hoped for as in the above postings with cash now in the bank thankfully. The end annuity figure didn't breach the 330 limit so hopefully this will be of help to others in a similar situation.


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