(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)
[PN Glossary]
Although we are concerned to ensure that only acceptable
items are included in pensionable remuneration, what is even more
important from our point of view, is the definition of "final
remuneration" used in the rule which places an overriding limit on
the benefits (see Section 6 of this Part). Both the Finance (No 2)
Act 1987 and the Finance Act 1989 imposed extra limitations on the
final remuneration which may be used for the calculation of
benefits. Finance (No 2) Act 1987 excluded certain items of
remuneration from the pensionable field altogether (see
PSI6.4.4-5), introduced an averaging
requirement on all those employees whose remuneration in any year
subsequent to 5 April 1987 used for the purposes of calculating
benefits has exceeded £100,000 (see
PSI6.4.20) and extended the averaging
requirement to any individual who within 10 years of retirement was
a controlling director if he or she ceased to be such a director on
or after 17 March 1987 (see
PSI6.4.19). The Finance Act 1989 went
beyond this for members of schemes without continued rights (see
PSI2.3.22-24) by imposing a
"permitted maximum" or "earnings cap" on the remuneration which may
be pensioned through approved pension schemes (see
PSI6.4.7-11).
