PSI9.2.6 - Service after Normal Retirement
Date: Benefits Deferred to Actual Retirement (Discretionary
Practice Pre FA 89) - Methods of giving extra benefits - Lump
Sum
(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)
[PN8.34(c)]
Where total benefits are increased under alternatives a. or
b. in
PSI9.2.5 the lump sum retirement benefit
may also be increased. But the increase is limited to the addition
of interest in line with the scheme's investment yield during the
period of deferment.
Where a pension debit is taken into account (see
PSI9.2.2), the lump sum must not exceed
for a Finance (No 2) Act 1987 member
- 2.25 x initial rate of pension payable
(see
PSI8.1.25) after reduction to
take account of the pension debit where the lump sum is by
commutation of pension, or
- 3 x initial rate of pension payable (see
PSI8.1.25) after reduction to
take account of the pension debit where the scheme rules provide
for a pension and separate lump sum,
and for a pre Finance (No 2) Act 1987 member the greater of
- 2.25 x initial rate of pension payable
(see
PSI8.1.25) after reduction to
take account of the pension debit where the lump sum is by
commutation of pension, or
- 3 x initial rate of pension payable (see
PSI8.1.25) after reduction to
take account of the pension debit where the scheme rules provide
for a pension and separate lump sum, or
- the maximum approvable lump sum determined
in accordance with the scheme rules as if there had been no pension
sharing on divorce order (see
PSI9.2.4–6) reduced by an amount
of
2.25 x the pension debit where the lump sum is by commutation of
pension, or
3 x the pension debit where the scheme rules provide for a
pension and separate lump sum.
The pension debit is calculated on the basis of the
appropriate example in
PSI9.1.14.
