rollingstone
Registered User
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- 14
A friend of mine has approached me for advice on cashing in on a small pension policy that he holds, but the documentation he has received on the pension policy from Aviva is so unclear. I'm hoping some on here can assist. He's still working (aged c 60), in the services sector, but needs the money (his job would not be well known for good pay, and does not provide an occupational pension scheme), so he just wants to retrieve as much cash as he can now and no pension. Facts include:
- the maturity date of the policy is Sept 2026.
- the current retirement value is just under €7k.
The options he has been given include: (1) a single life pension of €250 pa (2) tax free cash sum of c€1,700 and single life pension pf €180 pa (3) tax free cash sum €c1,700 and the balance as a once off trivial pension payment subject to tax and retained benefits. (4) tax free cash sum of 25% of the fund with the balance to be taken as taxable cash.
Therefore it looks like option 3 or 4 for him. The primary question I have is what would be the difference between the 2? What is a trivial pension?. I have googled it and and still not clear on how it applies.
On the application form where he needs to select the option for Trivial Pension, it gives him 2 options - (a) a once off trivial pension payment (applies only if the fund value after taking tax free cash is less than €30,000, which it would be; or (b) trivial pension (less 10% tax) - it states that an approved scheme may permit full commutation of a pension if the total benefits payable to an employee under that scheme do not exceed the value of a pension of €330 pa. Which I think is the case here. Does this effectively mean that he could take 25% of the fund tax free, and that a tax rate of only 10% would be deducted from the balance of encashment?.
Would appreciate any guidance you could provide on the above. Thanks in advance.
- the maturity date of the policy is Sept 2026.
- the current retirement value is just under €7k.
The options he has been given include: (1) a single life pension of €250 pa (2) tax free cash sum of c€1,700 and single life pension pf €180 pa (3) tax free cash sum €c1,700 and the balance as a once off trivial pension payment subject to tax and retained benefits. (4) tax free cash sum of 25% of the fund with the balance to be taken as taxable cash.
Therefore it looks like option 3 or 4 for him. The primary question I have is what would be the difference between the 2? What is a trivial pension?. I have googled it and and still not clear on how it applies.
On the application form where he needs to select the option for Trivial Pension, it gives him 2 options - (a) a once off trivial pension payment (applies only if the fund value after taking tax free cash is less than €30,000, which it would be; or (b) trivial pension (less 10% tax) - it states that an approved scheme may permit full commutation of a pension if the total benefits payable to an employee under that scheme do not exceed the value of a pension of €330 pa. Which I think is the case here. Does this effectively mean that he could take 25% of the fund tax free, and that a tax rate of only 10% would be deducted from the balance of encashment?.
Would appreciate any guidance you could provide on the above. Thanks in advance.