(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)
[PN10.16]
A lump sum greater than the amount specified in
PSI13.3.15 may be provided as follows:
for Finance Act 1989 members an amount equal to 2.25 times the
initial annual rate of pension to be paid determined in the same
manner as set out in
PSI8.1.25. Where the scheme
rules provide for a pension and a separate lump sum rather than a
commutable pension, the maximum is an amount equal to 3 times the
initial annual rate of the separate pension. For pre-1 June 1989
continued rights members an amount calculated in accordance with
the formula set out in
PSI8.1.24. Where total
benefits are granted at a rate of 1/30th of final remuneration for
each year )÷( or exceeds 1, the maximum approvable lump sum is
calculated by reference to the table in
PSI8.1.23 to determine LS and
the fraction N/NS is then applied to the result. For pre- 17 March
1987 continued rights members an amount calculated on the formula
N/NS x LS where N and NS are as described in
PSI13.3.7, and LS is determined in the
same way as described in
PSI10.1.12 substituting the
date of termination of pensionable service for the date of
retirement. Any restriction for retained benefits (see
PSI8.1.31) at their value at
the date of termination of pensionable service, must be made in
arriving at LS before multiplying by the fraction N/NS. These
limits are modified (see
PSI13.3.34) where a member’s
benefit entitlement in the scheme is
