A Trivial Consideration?

In December 2014, the Incentive Exercise Monitoring Board (the "IEMB") confirmed in a new Q&A document that the Code of Good Practice for Incentive Exercises (the "Code") applies to small and trivial commutation exercises if they are "one-off" rather than "business as usual" exercises. This clarification is timely given the new pensions flexibilities which from 6 April 2015 will, amongst other things, enable individuals to commute their trivial pension pots or take small lump sum payments in wider circumstances than previously.

The Code of Good Practice

The Code was prepared by a pensions industry working group and issued in June 2012 in response to concerns that members' interests were not being adequately protected as increasing numbers of employers sought to minimise their liabilities under defined benefit pension schemes through incentive exercises. Compliance with the Code is voluntary, although the Pensions Ombudsman and the Financial Ombudsman Service will