PSI1.3.33 - Establishment and Administration of Retirement Benefits Schemes: Exempt Approved Schemes and Conformity with Trust Law - Interim Deeds - Discretionary Schemes

(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)

A scheme in which membership and benefits are at the employer's discretion does not by itself give enforceable rights to any specific employee. This makes the validity of the trust created by the interim deed procedure particularly questionable. However, a discretionary scheme can be accepted as coming into existence when:

4. at least one employee has been nominated as a member,
5. the member has been given sufficient information about his or her rights under the scheme, and
6. a contract putting a Life Office at risk has been effected, or, in a self-administered scheme, a contribution has been received by the trustees.

The member's announcement should cover the points mentioned in PSI18.1.24. It should also identify the trust property in which the member has an interest by stating the name of the Life Office issuing the policy and the basic sum (or annuity) assured. (See PSI18.1.15 with regard to the approval date for a discretionary scheme.)