PSI3.1.25 - Membership of Schemes: Eligibility - Membership of an Employer's Occupational Pension Scheme and Personal Pension Schemes - s632A Eligibility


(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)

If the employee is in one of the bullet points below, he/she is eligible to contribute to a personal pension scheme in a tax year when he or she is also a member of an employer's occupational pension scheme (these conditions are from s632A ICTA 1988) -

  • he/she has actual net relevant earnings in the tax year (this includes earnings from an employment in relation to which the employee is a member of an employer's occupational pension scheme which only provides a death in service lump sum and/or death in service spouse’s/dependant’s pension), OR
  • he/she has no actual net relevant earnings in the tax year, but for at least part of the tax year is not a member of an employer's occupational pension scheme, and satisfies one of the following
  • he/she is resident and ordinarily resident in the UK at some time in the tax year, OR
  • he/she was resident and ordinarily resident in the UK at some time in one of the last five tax years, and was resident and ordinarily resident in the UK when starting the personal pension arrangement, OR
  • at some time in the tax year he/she is a Crown Servant serving abroad, OR
  • at some time in the tax year he/she is abroad as the spouse of a Crown Servant serving abroad.

Personal pension benefits arising from contributions made during periods of eligibility under both the bullets above are retained or aggregable benefits (as appropriate) when applying Inland Revenue limits to benefits from any occupational pension scheme (see PSI Part 6.5). Where only part of the personal pension benefits have arisen from contributions made during periods of eligibility under these criteria, the relevant proportion of the benefits are retained or aggregable benefits (as appropriate), the rest can be ignored. It can be assumed that the benefits have accrued evenly over the total period of membership of the personal pension. Any fluctuation in the level of contribution and rate of investment return can be ignored.

More details about these eligibility criteria can be found in Part 3 and Appendix 1 of IR 76 Inland Revenue Guidance Notes on Personal Pension Schemes (including Stakeholder Pension Schemes) or by contacting the Personal Pension Helpline on 0845 600 2622.


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