Phoenix Group is offering 8,000 pensioners with small pension pots the chance to swap their annuity income for cash.
The Mail on Sunday reports the pension provider is piloting a new scheme for 8,000 customers aged between 70 and 85 to cash in annuities they bought with “trivial” pots.
Trivial commutation rules allow people who are over 60 years old with total defined benefit and defined contribution pension savings worth less than £18,000 to take their entire pot as cash.
The newspaper cites new rules, introduced last year, under which pensioners can convert existing annuities into cash as long as the amount is under £2,000.
Phoenix spokeswoman Shellie Wells told the Mail: ”The legislation dictates that we can pay out a maximum of £2,000 for each pot. The amount offered reflects the individual policyholder’s circumstances.
“We expect about 60 per cent of those invited to take up the offer, which will be tailored to each person.
“Some people will prefer to keep their annuity as they like to get a regular income, however small. But others may benefit from having a lump sum.
“There is an advantage to us as well as we have to keep a lot of money aside to pay people however long they live.”