PSI5.1.27 - Contributions by Employers: General - Duration of Contributions

(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)

Contributions to an individual arrangement or earmarked scheme will normally stop at the member's NRD. There should by then be sufficient funds to provide the member's promised benefits. If the scheme is a money purchase type the member is entitled only to whatever benefits the accumulated moneys can buy at that time, subject to normal Revenue limits. In either case the employer may pay further contributions after the member has retired, or if retirement is deferred, to:

1. bring benefits up to the maximum approvable level and/or
2. provide post-retirement cost of living increases.

If the employer pays further contributions after the member's original benefits have been secured by the purchase of an annuity, it is acceptable (subject to adequate provisions in the scheme rules) for the member to defer the purchase of an annuity in respect of the additional benefits and drawdown income on those benefits - see PSI25.2.6.

The same principles apply also to small self-administered schemes which, although operated through a common trust fund, are usually funded on an individually costed basis for each member. With large common trust funds, whether insured or self-administered, the funding basis is different and contributions cannot normally be attributed to individual scheme members.