(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)
[PN7.6]
Post-Finance Act 1989 members, in other words members without
continued rights, are subject to the “permitted
maximum” (see
PSI6.4.11). The maximum rate of
accelerated accrual for these members is as set out in
PSI6.5.8but they may not be provided
with benefits calculated by reference to any measure of earnings
greater than the permitted maximum (see
PSI6.4.8). So where, for example, the
scheme has an accrual rate of 1/80th of final remuneration for each
year of service, a Finance Act 1989 member retiring in 1995/96 with
total service of 40 years and final remuneration of £100,000,
cannot be provided with a total benefit of 40/80ths x £100,000
= £50,000 on the basis that this does not exceed 2/3rds of the
permitted maximum in 1995/96 (2/3rds x £78,600 =
£52,400). However, there is no objection to the inclusion of a
power of augmentation whereby the benefits can be increased,
subject to retained benefits (see
PSI6.5.54-68) to a maximum of N/30ths x
permitted maximum either by reference to a conventional Inland
Revenue limits rule (see final sentence of
PSI6.5.17) or subject to our specific
approval.
