PSI6.5.5 - Total Benefits on Retirement at Normal Retirement Age: Maximum Total Benefits - Final salary/defined benefit schemes - N/60ths Accrual

(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)

[PN7.4]

A pension accrual rate of N/60ths is regarded as a standard for employees who can complete 40 years’ service but not many employees remain with an employer for that long. An approved scheme may therefore give benefits in excess of N/60ths to employees who have less than 40 years’ service to NRD. The two most common ways are:

3. by giving benefits on an annual accrual rate in excess of N/60ths (see PSI6.5.11-20), or
4. giving benefits based on the uplifted 60ths table (see PSI6.5.6).

Alternative b. is only available to pre-17 March 1987 continued rights members.

Subject to PSI6.5.51 whenever a pension greater than N/60ths is given, any retained benefits from previous occupations or employments must be taken into account for the purpose of ensuring that in aggregate total benefits do not exceed the 2/3rds limit (see PSI6.5.54-68).

A pension accruing at a rate of N/60ths might have to be reduced where an employee’s benefit rights are reduced by a pension sharing on divorce order and the pension debit must be taken into account for Revenue limits purposes (see PSI6.5.89).