The trivial commutation limit is currently £16,000 and will rise in stages to £18,000 in 2010. The cost of raising the trivial commutation limit would depend upon a number of behavioural factors, though independent research by the Pensions Policy Institute published in June 2007 suggests the cost to the Exchequer from significantly raising the current limits would most likely be very high. Figures from the ABI show that many annuitised pots are below the £16,000 ceiling for trivial commutation, which suggests the limits are already very generous.
At PBR 2006 the Government announced that HMRC would discuss with interested parties concerns raised regarding the administration costs of paying trivial commutation lump sums under current rules. The Government are exploring how the current rules impact on the interests of individual pensioners, pension savers, and pension providers and how they fit with its wider objectives of encouraging pension saving to provide people with an income in retirement.