PSI6.1.16 - Total Benefits on Retirement at Normal Retirement Age: General - Payment of pensions Variable Benefits
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(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)
Despite PSI6.1.15, we do not object (subject to certain conditions) to the use of an investment linked pension, ie, one payable from the proceeds of an annuity policy which remains investment linked after it comes into payment and may, if the investment performs badly, have to be reduced. the conditions are:
- that the annual rate of pension payable must not at any time exceed the normal Revenue maximum (including any cost of living increases for the period since payment of the pension began - see Part 7). Let the Divisional Manager see any case where this restriction is disputed;
- that a fluctuating pension must not be forced on a pensioner. The scheme rules should let the employee choose at retirement whether to take an investment linked pension or one that cannot be reduced below its initial annual rate.
Some schemes of this type offer a guarantee that the pension will not fall below some minimum level but we do not require this as a condition of approval.
