(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)
[PN9.5]
If the scheme rules do not specifically provide for
post-retirement increases then the employer cannot fund for them in
advance. However, this does not prevent pension increases within
acceptable limits (see
PSI7.1.1) being paid, for example under
a power of augmentation. Increases may then be paid out of surplus
funds or the employer can make a special contribution (see PSI Part
5 Section 3
PSI5.3.1) to cover the cost.
Alternatively, the pension increases can be funded through
supplementary arrangements or by Hancock annuities (see
PSI1.1.17).
