(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)
Some money purchase schemes are intended only for low paid
employees and present little risk of excessive benefits, but many
are designed for controlling directors. For example small
self-administered schemes and most earmarked schemes and individual
arrangements marketed by Life Offices, are aimed at such directors.
The pattern of contributions is likely to be more erratic than in a
final salary scheme and funding therefore needs to be tightly
controlled to reduce the risk of surplus funds arising. We thus
require the employer to tell the member what benefits are being
targeted for him/her and his/her dependants (see
PSI18.1.24). The scheme may
then be funded to provide only those benefits. We also control the
pace of funding to prevent excessive benefits being preserved if
the member leaves service (see Part 20 Section 4).
