PSI13.3.15 - Withdrawal from Service: Deferred Benefits - Deferred Lump Sum - Limit On Benefit - Basic 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)

[PN10.15]

The maximum lump sum retirement benefit which may be paid out of deferred benefits without taking account of the level of the total benefits being provided for the member (but see PSI8.1.35 in relation to Finance Act 1989 controlling directors) is an amount equal to 3/80ths of final remuneration for each year of service (up to 40 years) to the date of termination of pensionable service. A lump sum provided on this basis may be increased during the period of deferment to the same proportionate extent that the Retail Prices Index has increased during the period. See PSI13.3.34 where a member’s benefit entitlement in the scheme is

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