PSI8.1.47 - Lump Sum Benefits and Commutation: Maximum Lump Sum Benefits – Pension Sharing on Divorce – Calculating Pension Debits

(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)

Where a pension debit must be taken into account for Revenue limits purposes in relation to lump sum benefits (see PSI8.1.44), how the pension debit is calculated will depend on whether the scheme rules provide employees with

• a lump sum only benefit, or
• a pension and separate lump sum, or
• an option to commute part or all of their pension in exchange for a lump sum.

Where the scheme provides a pension and separate lump or a commutable pension, the pension debit is calculated in the same way as for Revenue limits on pension benefits. PSI6.5.94-100 explains how the pension debit is calculated for Revenue limits purposes in the these circumstances. PSI8.1.49 explains how the pension debit is calculated for schemes that provide lump sum only benefits.