(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)
[PN9.8]
The simplified fixed factor of 12:1 is regarded as an
enhanced commutation factor. Consequently, members to whom this
factor is applied cannot be provided with increases on the whole
(pre-commutation) pension.
[PN7.45]
Members with continued rights to whom the factor of 12:1 is
not applied may use suitable enhanced commutation factors only if
their schemes are to give the post- retirement increases on one of
the acceptable bases outlined in
PSI7.1.4 or if their rules
provide for pensions to be reviewed regularly and increased (within
the limit of the rise in the cost of living) at the discretion of
the employer or administrator if funds permit. In the latter
situation the use of enhanced commutation factors is subject to the
proviso that a certificate by an actuary is supplied to us stating
the anticipated percentage rate of future increases on the basis of
the current annual contributions without taking into account any
future special contributions which the employer might make.
[8.2.29]
