(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
An unfunded scheme is so called because although, as with all
retirement benefits schemes, the employee is promised
‘relevant benefits’ (see
PSI1.1.4), no advance provision is made
formally in a separate fund or insurance policy. When the benefits
become due, they are paid direct by the employer, "out of the
till". An unfunded scheme is often for one named person. Its terms
may be set out in the employee's service agreement, in a deed of
covenant or simply in a letter from the employer. Alternatively, a
scheme may be established by more formal documentation and cover a
number of employees.
