PSI6.4.7 - Total Benefits on Retirement at Normal Retirement Age: Pensionable Remuneration and Final Remuneration - Permitted Maximum

(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 7.6]

The Finance Act 1989 introduced a permitted maximum, known as the “earnings cap”, on the final remuneration which may be pensioned through an approved occupational pension scheme - now section 590C ICTA 88. So that the permitted maximum cannot be circumvented by fragmenting remuneration between separate companies or schemes, it applies to the aggregate of remuneration from relevant associated employments (see PSI6.4.9) or pensioned through connected schemes (see PSI6.4.10). A similar restriction applies to remuneration for contribution purposes although here there is an important distinction in that the cap applies to all employments whether or not associated (see PSI4.2.7).