RPSM03101550 - Technical Pages - Protecting pension rights from tax charges: Valuing pension rights at 5 April 2006: Preservation limits

Retirement benefits scheme limit : preservation limit for retirement benefits schemes

Following on from RPSM03101531 if 5 April 2006 falls before an individual’s normal retirement date in a retirement benefit scheme and the individual has employer sponsored money purchase rights in the scheme, the calculation of MPP should be carried out on the basis that preservation applies to the benefits.

The relevant preservation calculation will be the one published in the IR 12 ‘Occupational Pension Schemes Practice Notes’ at the time the scheme was approved (or the earliest published calculation for schemes approved before 1 October 1974).

RPSM03101551 duplicates the relevant text for the Practice Notes published on 1 October 1974. This applies to schemes approved before 1 May 1979.

RPSM03101560 duplicates the relevant text for the Practice Notes published on 1 May 1979. This applies to schemes approved after 30 April 1979 and before 29 November 1991.

RPSM03101570 duplicates the relevant text for the Practice Notes published on 1 September 1991. This applies to schemes approved after 28 November 1991.

For schemes using the preservation calculation at RPSM03101551 and RPSM03101560 MPP should be taken to be the value of the rights calculated under paragraph 8 Schedule 36 divided by 20. Effectively the value under paragraph 9(3) will be equal to the value for the rights under paragraph 8.