PSI10.1.10 - Retirement before Normal Retirement Date: General - Limits on benefits - Funding

(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)

[PN13.1]

It is not acceptable for employers to fund in advance for early retirement or leaving service benefits on the above basis. It remains a requirement that funding should be geared to the provision of benefits at NRD (see PSI20.1.5). Members may however pay AVCs within the usual 15% limit, either to the scheme or to an FSAVCS, to fund for intended early retirement benefits (see PSI4.3.7). Any surplus AVC funds which result at eventual retirement must be repaid, subject to tax under Section 599A, ICTA 1988 (see PSI4.3.12 and PSI4.4.6).