To ask the Chancellor of the Exchequer if he will assess the potential impact of extending the possibility of exchanging private pension rights for a cash sum of a value greater than 25 per cent. of the total to situations where the total of that person's pension rights is greater than one per cent. of the Lifetime Allowance; and if he will make a statement. (151332)

The tax rules provide that where a member's total pension benefit rights in registered pension schemes do not exceed one per cent of the lifetime allowance then the member may commute some or all those benefits in return for receiving a taxable lump sum between age 60 and age 75. This process is known as “trivial commutation”.

At PBR 2006 the Government announced that HMRC would discuss with interested parties the concerns raised regarding the administration costs of paying trivial commutation lump sums under these rules. The Government will explore the way in which the current rules impact across a range of interests, bearing in mind both the potential impact on individual pensioners, pension savers, and pension providers and the way the rules fit with the Government’s wider objectives in encouraging pension saving to produce an income stream in retirement.