PSI13.2.8 - Withdrawal from Service: Refunds of Contributions - Addition of Interest

(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)

[PN10.46]

A refund of contributions may include interest up to the date of payment. Where, however, an employee who elected to take deferred benefits subsequently changes his/her mind, interest can be paid only up to the date of leaving service. Otherwise an early leaver might use the scheme as a tax exempt "money box". Our only other requirement is that the rate of interest should be reasonable. You can normally accept the rate of return achieved on the scheme assets or the bonuses paid on the initial sum assured. This interest is not true interest for income tax purposes, but is regarded as an element in the calculation of the refund.

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