(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)
The definitions of final remuneration referred to in
PSI11.1.8may not give a reasonable
result where an employee had suffered a substantial reduction in
salary because of long-term illness. One example is an employee
who, whilst still in service, had been receiving sick pay under a
permanent health insurance scheme (see
PSI10.2.1) for more than 5
years. In this type of circumstance final remuneration may be
calculated on the earnings in the best year in the 5 years before
the onset of ill health (together with an appropriate cost of
living addition for the period to the date of death).
