PSI9.2.3 - Service after Normal Retirement Date: Benefits Deferred to Actual Retirement (Discretionary Practice Pre FA 89) - Methods of Giving Extra Benefits - Actual Retirement Date Replaces Normal Retirement Date

(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)

[PN7.45(a) & 8.34(a)]

Under PSI9.2.2 (a) the member's actual retirement date becomes his or her NRD. The benefits can thus be based on total service and the best definition of final remuneration (see PSI6.4.15 et seq) at this new NRD.

Example A pre-F(No 2)A 1987 member with 8 years service to his or her normal retirement date stays in service for 2 further years.
Maximum benefits at the original NRD are a pension of 24/60ths, part of which can be commuted for a lump sum of 24/80ths of final remuneration (see PSI6.5.6 and PSI8.1.23).
But at actual retirement benefits can be given under PSI9.2.2 (a) as if 10 years’ service had been completed at NRD.
The maximum pension fraction then becomes 40/60ths and the lump sum 36/80ths of final remuneration.

Where a pension debit is taken into account (see PSI9.2.2) the maximum pension fraction is 40/60ths less the pension debit and the lump sum must not exceed

for Finance (No 2) Act 1987 member

• 2.25 x the initial rate of pension payable after reduction to take account of the pension debit

and for pre Finance (No 2) Act 1987 member the greater of

• 2.25 x the initial rate of pension payable after reduction to take account of the pension debit, or
• the maximum approvable lump sum determined in accordance with the scheme rules as if there had been no pension sharing on divorce order, say 36/80ths, reduced by an amount of 2.25 x the pension debit.

The pension debit is calculated on the basis of the appropriate example in PSI9.1.14.