(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)
Maximum total benefits are calculated by reference to an
employee’s length of service with the employer (see
PSI6.5.70 -77) and his or her final
remuneration (see Section 4 of this Part). Maximum total benefits
are measured in terms of the aggregate of any pension payable
(including any pension in payment in the form of income drawdown -
see
PSI25.2.4) together with the
pension equivalent (see psipart8, Section 2
PSI8.2.1) of any non-pension
benefits. It is a condition of approval that (subject to completion
of the necessary period of service (10 years for pre-17 March 1987
continued rights members and 20 years for all other members)) the
maximum total benefits an occupational pension scheme (other than a
simplified defined contribution scheme (see
PSI1.1.22 and PSI22.3.65))can
pay should not exceed 2/3rds of final remuneration at NRD. For
Finance Act 1989 members subject to the post-Finance Act 1989 basis
for early/late retirement (see
PSI6.3.1 and
PSI9.1.1) the maximum (again
subject to completion of at least 20 years’ service) is
2/3rds of final remuneration (subject to
PSI6.4.11) at retirement at any time
between the ages of 50 and 75. This maximum is not affected by the
existence of the State scheme and members may therefore also
receive the basic State pension plus, if the occupational pension
scheme is not contracted-out, an earnings related additional
component. However, the maximum might be affected if the
employee’s benefits are subject to a pension debit (see
PSI6.5.89) or the employee has benefits
in the same scheme that relate to employment with a participating
employer and a pension credit (see
PSI24.1.6-7).
