(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)
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
[PN6.4 & 13.1]
One of the "prescribed conditions" for mandatory approval
(see
PSI2.3.7) - in Section
590(3)(a) - is that any benefit for an employee is a pension on
retirement at a specified age. This principle is also maintained in
our practice on discretionary approval of schemes (see
PSI2.3.13) other than
simplified defined contribution schemes (SDCSs). Prior to the
Finance Act 1989 Revenue limits were geared to the date of
attaining this specified age (but see
PSI6.3.3) - generally known as the
normal retirement date (NRD) - and are higher where the employee
retires later or lower where retirement is earlier than this date.
But for members subject to both the Finance Act 1989 requirements
and the "new" regime for early/late retirement (see
PSI9.1.1) NRD need not affect
the level of benefit provision. Such members may be provided with
maximum total benefits of 1/30th of final remuneration for each
year of service (up to 20 years) with the employer, on retirement
or leaving service at any time between the ages of 50 and 75.
However, it is still necessary to link the funding of a member's
benefits
by the employer to those which would be
permissible at NRD. Any enhancement of early retirement benefits up
to N30ths of final remuneration for each year of service (up to 20
years) must be provided by way of augmentation by the employer at
the time the benefits actually come into payment (see also
PSI4.3.7,
PSI10.1.10 and
PSI20.1.5).
