PSI6.5.8 - Total Benefits on Retirement at Normal Retirement Age: Maximum Total Benefits - Final salary/defined benefit schemes - N/30ths Accrual F(No2)A 1987

(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)

[PN7.40-41]

As explained in PSI4.12 (Introduction), the Finance (No 2) Act 1987 introduced a change to the rate of accelerated accrual by placing a maximum rate of n30ths on the total benefits which may be provided for each year of pensionable service to NRD up to a maximum of 20/30ths (2/3rds) again subject to the final paragraph of PSI6.5.5. Employees affected cannot therefore obtain a maximum pension until they have completed at least 20 years’ pensionable service to NRD unlike their pre-17 March 1987 continued rights counterparts who can be provided with such a pension after 10 years’ pensionable service to NRD (see PSI6.5.6). A pension accruing at a rate of N/30ths 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).