Railways Pension Scheme · CAS-33277-G2Q6

CAS-33277-G2Q6

Ombudsman’s Determination Applicant Mr K

Scheme Railways Pension Scheme (the Scheme)

Respondents Railways Pension Trustee Ltd (the Trustee)

Outcome

Complaint summary

Background information, including submissions from the parties

1 CAS-33277-G2Q6

“Rules on taking a small pension as a cash lump sum:

You may be able to take the whole of your pension as a trivial commutation lump sum if:

- You’re aged at least 55, or you’re retiring at an earlier age because of ill- health; and the value of all your pension benefits (including defined contribution pensions and pensions already in payment, but ignoring any State Pension) when added together do not exceed £30,000 in total.

You may be able to take the whole of your pension as a small pot if:

- You’re aged at least 55, or you are retiring at an earlier age because of ill- health; and

- The value of your pension arrangement does not exceed £10,000.

Valuing your defined pension before you have started to take it for trivial commutation purposes:

The value is your annual pension entitlement, multiplied by 20 plus any separate tax-free cash sum.”

The advice from the TPAS website suggested the value of Mr K’s pension benefit should be multiplied by 20, but this is for pension pre-payment. As Mr K had been in 2 CAS-33277-G2Q6 receipt of his pension since 2008, the correct factor would be 25. In either case, Mr K’s benefits exceeded the upper limit.

Mr K says that the Department for Work and Pensions (DWP) was reducing his income support payments and that both he and his wife were struggling financially and required the lump sum payment to pay off debts.

Mr K also says that both he and his wife have several health conditions and the lump sum payment would also be used to make adaptions to their home to improve their quality of life.

Mr K says that TPAS informed him that the Trustee can release his funds at its discretion and under special circumstances.

Adjudicator’s Opinion

o The member has not been paid a trivial commutation lump sum previously from any registered pension scheme.

o The lump sum is paid in respect of a defined benefits arrangement or an in- payment money-purchase in-house scheme, or both.

o The member’s pension rights do not exceed the upper limit on the nominated date.

o The lump sum is paid when the member has lifetime allowance available.

o The lump sum stops the member’s entitlement to defined benefits and in- payment money-purchase in-house scheme pensions under the registered pension scheme making the payment.

o The lump sum is paid when the member has reached 55 or meets the ill- health condition or has a protected pension age.

3 CAS-33277-G2Q6

Mr K did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr K provided further comments which did not change the outcome. He said:-

• Both the Trustee and the Pensions Ombudsman have discretion to grant access to these funds in special circumstances.

• Mr K and his wife have physical and mental health difficulties which impact greatly on their daily life. He is reliant on accessing his benefits from the Scheme as a trivial commutation lump sum to relieve their situation.

I agree with the Adjudicator’s Opinion and I will therefore only respond to the points made by Mr K for completeness.

Ombudsman’s decision

Anthony Arter

Pensions Ombudsman 18 May 2020

4