PSI3.3.5 - Membership of Schemes: Directors - Controlling Director Restrictions

(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)

The special restrictions which we impose on controlling directors concern:

6. the calculation of final remuneration (see PSI6.4.16-19);
7. for controlling directors without continued rights any benefits from retirement annuity contracts or personal pension schemes arising from premiums or contributions paid out of relevant earnings of the current employer which are treated as benefits from the current employer and aggregated for Revenue limits purposes (see PSI6.5.67),and,
8. further restrictions on pension and lump sum benefits for and in respect of all controlling directors, whose benefits are subject to a pension sharing on divorce order (see PSI6.5.89), and
9. the valuation of AVC benefits where they are drawn before employer funded benefits (see psi25.3.9), and

where service continues after normal retirement date,

10. accrual of extra pension and lump sum (see PSI9.2.14-18).
11. discretionary distribution of death in service lump sums (see PSI11.2.39-42).

The restrictions in e. and f. are applicable to controlling directors with continued rights (see PSI2.3.23) and to non-continued rights controlling director members of schemes approved prior to 27 July 1989 who remain subject to the pre-Finance Act 1989 discretionary practice for late retirement (see PSI9.1.15).

Schemes which include controlling directors in their membership require a more detailed examination than schemes for ordinary employees, particularly where large amounts of money are involved (see psipart22 Section 3).