(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)
A pension debit is taken into account for Revenue limits
purposes on the basis of a hypothetical deferred pension equivalent
of the pension debit, or “negative deferred pension”.
How the pension equivalent of the pension debit is calculated at
the employee’s normal retirement date is explained in
PSI6.5.95 for defined benefit
schemes and
PSI6.5.96 for money purchase
schemes. A feature of the calculation is that the deferred pension
equivalent of the pension debit established at the date of divorce
is revalued to normal retirement date by reference to the Statutory
Revaluation requirements under Social Security legislation that are
applicable to deferred defined benefits generally (see
PSI6.5.97). However,
Statutory Revaluation only applies to normal retirement date so
where benefits are paid to the employee after normal retirement
date further revaluation is required for the period from normal
retirement date to the date benefits are actually paid. For Revenue
limits purposes, it ensures that the value of the pension debit
remains relative to the value of the employee’s benefits as
it is probable that the benefits will increase in the period
between normal retirement date and the date benefits are taken. The
further revaluation requirements are set out in
PSI9.1.14.
