PSI6.2.13 - Total Benefits On Retirement At Normal Retirement Age: Life Cover after Retirement - Life Cover in Service after NRD

(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)

[PN7.49]

Where continued life cover is provided during service after NRD in circumstances where the member has already taken employer funded benefits at or after NRD (see PSI6.2.1 and 6.2.2b), the value of the cover is a retirement benefit which must be taken into account for the purposes of determining whether benefits are within Revenue approvable limits (see PSI6.2.1). For this purpose the cover should be valued on the basis set out in PSI6.2.5-7 and on the assumption set out in PN 7.38 subject always that such cover providing a lump sum death benefit which does not exceed £2,500 can be ignored (see PSI6.2.3). The only other conditions are:

[PN7.50]

18. the death benefit should form part of the deceased scheme member's estate as in PSI6.2.12 (this represents a change of practice from the previous position in paragraph 11.11 of the 1979 Practice Notes which permitted discretionary distribution);

[PN7.49]

8. the cover should not extend beyond the date of actual retirement; and

[PN7.51]

9. the premiums should not be referred to "pension business" (see PSI6.2.10) if other than term life policies are used.

These conditions replaced those in paragraphs 12.18 and 12.19 of the 1979 Practice Notes for members within paragraph 6.2.2b above.