Changes to drawdown, trivial commutation, and small pots commutation

Produced by a Tolley Employment Tax expert

Employment Tax

Guidance

STOP PRESS: This guidance note may be affected by the changes to the taxation of pensions made by FA 2024, Sch 9 from 6 April 2024 onwards. The commentary below covers the rules that apply prior to that date. Before continuing your research, see the Abolition of the lifetime allowance guidance note.

Introduction

In his 2014 Budget speech, the Chancellor made the following statement:

‘We will completely change the tax treatment of defined contribution pensions to bring it into line with the modern world.’

He went on to say:

‘Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want. No caps. No drawdown limits. Let me be clear. No one will have to buy an annuity.’

The effect of that statement was to change fundamentally the pensions benefits system in the UK.

Changes to the rules associated with drawdown, trivial commutation and small pots commutation from 27 March 2014, as described below, were interim steps

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