EIM15020 - Non-approved and employer-financed retirement benefits schemes: general definitions

Non-approved: Section 387 ITEPA 2003, Sections 611 & 612(1) ICTA 1988. Employer-financed: Section 393A ITEPA 2003 as amended by Section 249(3) FA 2004

Employers frequently make financial provision for the retirement or death of their employees by setting up a pension scheme or fund or similar arrangement. The employer may make contributions in advance in order to fund the benefits (a funded scheme ) or simply pay benefits on retirement or death (an unfunded scheme). All such arrangements are retirement benefits schemes (see definitions below).

A receipt after 5 April 2006 is chargeable under this legislation only if it is provided under an employer-financed retirement benefits scheme. So when dealing with such a receipt do not try to apply guidance that deals with non-approved schemes.

A non-approved retirement benefits scheme will automatically become an employer-financed retirement benefits scheme at 6 April 2006 as long as it meets the definition of an employer- financed scheme set out in S393A ITEPA 2003.

A retirement benefits scheme is defined for the purposes of both non-approved and employer- financed schemes as a scheme that consists of or includes relevant benefits (Section 611(1) ICTA 1988 ICTA88 and Section 393A(1) ITEPA 2003).

“Scheme” is defined in the same way for both non-approved and employer-financed schemes as including a “deed, agreement, series of agreements or other arrangements”. It does not have to be a formal document and schemes do not have to adopt any particular form. See EIM15028 for more information.

However, the definition of “Relevant benefits” differs for non-approved and employer- financed schemes (see EIM15021).

In cases where it is claimed that the facts of the case do not constitute a non-approved or employer-financed retirement benefits scheme please refer the case to Pension Scheme Services (Technical), Yorke House, Castle Meadow Road, Nottingham NG2 1BG.