(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)
Section 591(2) gives a few examples of the way these
discretionary powers may be used. Using the sub-paragraphs in
section 591(2), the examples are
a. a pension of 2/3rds final remuneration or a lump sum in commutation of pension of 1½ (120/80ths) x final remuneration for less than 40 years service (see Part 6)
b. pensions for the widows, widowers, children or dependants of an employee on the death in service of the employee (see PSIPart11)
ba. pensions for the widows, widowers, children or dependants of an ex-spouse on the death of the ex-spouse before an age at which benefits could be paid to the ex-spouse
c. a death in service lump sum of up to 4 times the employee’s final remuneration, not including any refund of contributions (see PSIPart11)
d. payment of an immediate pension following incapacity or retirement within 10 years of normal retirement age (see Part 10)
e. refunds of employee contributions in certain circumstances (see PSIPart4 and PSIPart13)
f. approval of a scheme that includes an overseas employer or a scheme set up overseas for the benefit of United Kingdom employees (see PSIPart15)
g. employees who leave service before retirement age to have their accrued benefits secured under an annuity contract with an insured company of their choice instead of being retained in the pension scheme (see PSIPart13). This provision was inserted by section 32 Finance Act 1981 and such annuities are thus often called "section 32" annuities.
h. the establishment of a free-standing additional voluntary contribution scheme to which the employer does not contribute (see PSI1.1.20).
