PSI6.5.70 - Total Benefits on Retirement at Normal Retirement Age: Maximum Total Benefits - Pensionable Service - General

(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)

The meaning of “service” or “pensionable service” for the purpose of calculating benefits is generally a matter for the employer to decide when setting up the scheme. It may be limited to the period after the scheme started but usually it covers the whole length of the member’s employment with the employer. Specific guidance on various aspects of the subject can be found in:

1. Part 3, Section 2 - service with a partnership before the employee became a partner,
2. PSI3.3.21 - unremunerated service by a director,
3. Part 3, Section 4 - temporary absence from service,
4. PSI13.3.18 - employee rejoins a scheme having previously ceased membership without leaving service,
5. Part 21, Section 3 - service within a group of companies which participate in a centralised scheme for associated employers,
6. PSI21.3.21 - service with unassociated employers whilst a member of a scheme for such employers, and
7. Part 15, Section 2 - overseas service.

You may occasionally be asked whether a period of service which represents an unworked notice period (in other words, from the date of termination of employment up to the end date of the contractual notice period) for which a payment in lieu of notice has been paid (but not a payment in lieu of lost pension rights) can be included in the calculation of service for Revenue maximum pension purposes. The position here depends on how the payment is treated for tax purposes and you will need to consult with the Inspector of Taxes on this. If the Inspector confirms that the payment has or will be assessed to tax under Schedule E by virtue of Section 19 ICTA 1988 then the period of “service” to which it relates may be regarded as pensionable. If on the other hand the Inspector says that the payment has or will be assessed to tax by virtue of Section 148 ICTA 1988, then the period of “service” may not be regarded as pensionable.