PSI10.1.28 - Retirement before Normal Retirement Date: General - Return to Work after Early Retirement - Same Employer

(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)

[PN7.12, 7.21(d) and PN Appendix IV]

The maximum limits on benefits for an employee who resumes work with his former employer after early retirement will depend upon whether the employee retired early because of incapacity or for other reasons. PSI10.1.13explains the position in incapacity cases.

Where early retirement was not on incapacity grounds and you are satisfied that the previous early retirement was genuine, future service may be pensioned even though the early retirement pension remains in payment. Benefits may be based on an accrual rate of up to N/30ths in respect of that future service with the continuing pension and the annuity equivalent of any lump sum already taken being treated as agregable benefits. But the maximum overall total benefits that may be given on ultimate retirement in respect of the employment as a whole is limited to 2/3rds of final remuneration calculated at ultimate retirement (less any retained benefits from former employments) and benefits for the final period should be restricted accordingly, if necessary to a rate below N/60ths. A separate lump sum may be given in respect of the second part of service in accordance with the limits set out in Part 8, Section 1.

If the member wishes to aggregate both periods of service the payment of the early retirement pension must be suspended and the position will then be the same as for incapacity cases as set out in the first paragraph of PSI10.2.13.

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