(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)
[PN7.3]
Private sector schemes generally give a pension at retirement
with the option to commute it for a lump sum within certain limits
(see Part 8). The benefits of most scheme members are related to a
fraction of final remuneration dependent on their length of
service. Schemes which adopt this basis are known as final salary
or defined benefit schemes. The most common accrual rate found in
scheme rules is 1/60th of final remuneration for each year of
service up to a maximum of 40. This scale of pension is called
strict 60ths or N/60ths with N being the number of years’
pensionable service with the employer providing the benefit.
