(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]
Where it is desired to provide immediate benefits for an
employee attaining NRD (or at any other retirement date) in
circumstances where final remuneration cannot be precisely
established because tax liability on all the constituent elements
of remuneration for the year or years in question has not been
determined, final remuneration may be calculated on the appropriate
basis using
PSI6.4.15 using those elements of
remuneration which have been finally determined for tax purposes.
Immediate “on account” pension and lump sum benefits
may be provided based on final remuneration so calculated. When tax
liability on remuneration is finally determined and final
remuneration recalculated providing scope for further benefits
(both pension and lump sum) these may be paid but they must not
cause total benefits to exceed Inland Revenue limits calculated as
at the date benefits were first taken.
Where the above applies in the case of a member who does not
have continued rights and whose lump sum retirement benefit is
calculated on the basis set out in
PSI8.1.25, a subsequent
additional lump sum will not be possible if final remuneration is
not finally determined for tax purposes until after the end of the
first year in which the pension has been in payment. Where
immediate benefits are not being provided or where a transfer
payment is to be made in respect of accrued pension benefits then
final remuneration may only be calculated using remuneration
assessable to income tax under Case I or II of Schedule E and upon
which tax liability has been determined.
