PSI10.1.31 - Retirement before Normal Retirement Date: General – Pension Sharing on Divorce – Post FA 89

(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)

Total benefits

Where an employee’s benefit entitlement in the scheme is

• permanently reduced by a pension sharing on divorce order (see PSI3.5.4), and
• the pension debit must be taken into account for Revenue limits purposes (see PSI6.5.89)

the maximum permissible total pension benefit for the employee must not exceed

• the amount of pension benefit that could have been paid to the employee had there been no pension sharing on divorce order (see PSI10.1.7)

less

• the pension equivalent of the pension debit (see PSI10.1.33).

Lump sums

The maximum permissible lump sum benefit must not exceed

• 2.25 x the initial rate of pension payable (see PSI10.1.7) after reduction to take account of the pension debit (see PSI10.1.33) where the lump sum is by commutation of pension, or
• 3 x the initial rate of pension payable (see PSI10.1.7) after reduction to take account of the pension debit (see PSI10.1.33) where the scheme rules provide for a pension and separate lump sum.