PSI10.1.32 - Retirement before Normal
Retirement Date: General – Pension Sharing on Divorce –
Pre 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
PSI10.1.12)
less
- the pension equivalent of the pension
debit (see
PSI10.1.33).
Where the N/NS x P calculation applies, the pension debit is set
against P before applying N/NS.
Lump sums
The maximum permissible lump sum benefit must not exceed
for a Finance (No 2) Act 1987 member
- 2.25 x initial rate of pension payable
(see
PSI10.1.12) 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 initial rate of pension payable (see
PSI10.1.12) 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
and for a pre Finance (No 2) Act 1987 member the greater of
- 2.25 x initial rate of pension payable
(see
PSI10.1.12) after reduction to take
account of the pension debit (see
PSI10.1.33) where the lump sum is by
commuation of pension, or
- 3 x initial rate of pension payable (see
PSI10.1.12) 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, 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
PSI10.1.12), reduced by an amount
of
2.25 x the pension debit (see
PSI10.1.33) where the lump sum is by
commutation of pension, or
3 x the pension debit (see
PSI10.1.33) where the scheme rules
provide for a pension and separate lump sum.
Where the maximum approvable lump sum for a pre Finance (No 2)
Act 1987 member is first determined in accordance with the scheme
rules as if there had been no pension sharing order and the formula
N/NS x LS is used (see
PSI10.1.12), the amount of 2.25 x the
pension debit is deducted from the result of the formula and not
just from the LS part of the calculation.
