PSI6.5.69 - Total Benefits on Retirement at Normal Retirement Age: Maximum Total Benefits - Retained Benefits offering a Choice of Form - Concurrent Employments

(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)

[PN16.31-34 and Glossary]

The extent of the restriction for retained benefits may cause problems where:

1. there are concurrent employments with a retained benefit from an earlier employment or occupation to be taken into account, or
2. where concurrent employment is only partial and a retained benefit in respect of a period of non-concurrence has to be taken into account.

In relation to (a) the position will depend on whether the concurrent employments are associated (see PSI6.4.9) or whether the schemes relating to them are connected (see PSI6.4.10). Where the employments are not associated and the schemes are not connected any such retained benefits should be apportioned by reference to the initial remuneration where the concurrent employments commence simultaneously and each amount treated as a separate retained benefit.

Example

Retained Benefit = £6,000

Concurrent Employment A initial remuneration = £15,000

Concurrent Employment B initial remuneration = £9,000

Apportionment of retained benefit:

Where the concurrent employments do not commence simultaneously, the retained benefits should either be set fully against the earliest employment and ignored for subsequent employments, or be set fully against the earliest and then re-apportioned on a remuneration basis as above when the subsequent employments commence.

Where the concurrent employments are associated or the schemes are connected, the retained benefit in full is set against benefits from the employment which vests first and any unexhausted balance is set against the benefits from the other employments successively as they vest. If all the benefits vest together the same principle applies but the sequence is immaterial. Paragraph 16.34 of PN contains an example showing how this works in practice.

In relation to (b) where in the case of:

1. a member without continued rights, the concurrent employments are not associated and the schemes are not connected, or
2. a member with continued rights,

the period of concurrent employment extends only to part of the overall period of service, then that part of the benefits which relates to that part of service where there was no concurrent employment must be taken into account as a retained benefit. In the case of a concurrent employment and/or occupation to which a personal pension scheme or retirement annuity relates, any part of the benefits from those sources which relate to a period when concurrency did not exist is to be taken into account as a retained benefit whether or not there has, at any time, been an association between the employments or between the employment and the occupation.

Further guidance can be found on SF 70/15(4).