PSI8.1.21 - Lump Sum Benefits and Commutation: Maximum Lump Sum Benefits - Maximum Accrual Rate - 3N/80ths Accrual

(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)

[PN8.5]

The main limit, which governs the rest of our practice, is a lump sum of 1½ times final remuneration for a career spanning 40 years to NRD. This is equivalent to an annual accrual rate of 3/80ths of final remuneration. This scale is commonly referred to as 3N/80ths, with "N" being the number of years' service (up to 40 years) with the employer providing the benefit. A lump sum on this scale is the maximum that may be provided without taking account of the level of total benefits being provided for the employee (but see PSI8.1.35). A different limit applies where an employee’s benefit rights in the scheme are reduced by a pension sharing on divorce order and the pension debit must be taken into account for Revenue limits purposes (see PSI8.1.44).