PSI12.1.15 - Benefits on Death after Retirement: Pension Benefits - Widow(er)s' and Dependants' own right pensions - Limit on Benefits

(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)

[PN12.2]

The limit on the amount of “own right” pension payable following the member’s death in retirement is that it should not exceed 2/3rds of the maximum pension (ie including the pension equivalent of any lump sum benefits whether provided separately or by commutation) that could have been approved for the employee at his/her retirement. It is not limited to 2/3rds of the actual pension in payment. In making this calculation

• a restriction is not necessary for the deceased member’s retained benefits from earlier employments, but
• the effect of a pension debit must be included (see PSI12.1.18) where the deceased member’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).