(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)
[JOM 25]
[PN Glossary]
A scheme which gives members the option to commute their
pension can used "dynamised final remuneration" to calculate the
lump sum benefits (see
PSI6.4.33-38). But dynamised
final remuneration is restricted to increases in total benefits.
This means that for pre-Finance (No2) Act 1987 members, it cannot
be used to increase the amount of lump sum retirement benefit in
isolation (see
PSI6.4.37). For members
affected by the Finance (No2) Act 1987 or by Finance Act 1989, the
revised basis of calculating maximum lump sum benefits ensures that
remuneration is no greater than that used for the calculation of
total pension benefits - see PSI8.1.24-25.
