In general retained benefits are rights to benefits built up in
previous employments or periods of self-employment from schemes or
contractual arrangements which have benefited from tax privileges.
The Finance Act 1970 introduced new rules for the tax
treatment of retirement benefits schemes set up by employers for
their employees. The aggregate benefits payable to an employee
retiring at normal retirement age without having to take into
account retained benefits was for pensions,1/60th of final salary
for each year of service and for lump sums 3/80th of final salary
for each year of service. Any individual accruing pension and lump
sum benefits at a faster rate than 1/60th and 3/80th for each year
of service had to take retained benefits from earlier employers
into account and deduct their value from the benefits that the
current employer was providing.
Where retained benefit calculations have to be taken into
account for the purposes of paragraph 9 Schedule 36 Finance Act
2004 (as amended by Finance Act 2005) the legislation does not
introduce any new concepts. Retained benefits must therefore be
taken into account in the way in which Inland Revenue practice
before 6 April 2006 dealt with them at the time that the retained
benefits arose.
The way in which retained benefits had to be taken into
account, how these were defined and calculated changed several
times in the years since 1970. These were set out in published
practice, the Practice Notes (IR12). New versions of the IR 12 were
issued at various times when practice changed.
For ease of reference the text of the different versions of
the IR 12 has been reproduced in the following pages. The date the
versions were introduced and the original IR reference numbers have
been shown as well.
Where the term retained benefit has been used in this
Chapter either in the text of this guidance or in the examples it
has the meaning and the usage in the text reproduced here.
The relevant dates showing when the practice was extant.
| Page | The Versions | Effective Dates |
| RPSM03110010 | October 1970 | Anytime up to 30.09.1974 |
| RPSM03110020 | October 1974 | 01.10.1974 – 30.04.1979 |
| RPSM03110030 | ||
| RPSM03110040 | May 1979 | 01.05.1979 – 30.09.1989 |
| RPSM03110050 | ||
| RPSM03110060 | October 1989 | 01.10.1989 for members
with pre FA89 rights this is mostly still current, where changes
have been inserted they are indicated in this summary.
01.10.1989 –31.08.1991 for 1989 members |
| RPSM03110070 | ||
| RPSM03110080 | September 1991 | Applies mostly to FA 1989 members 1.9.91 to 30.6.97 |
| RPSM03110090 | ||
| RPSM03110100 | ||
| RPSM03110110 | January 1995 | |
| RPSM03110120 | July 1997 | This is the current version, from 1 July 1997. The changes since then are shown at the end. This version is published on the internet as the 2001 version of IR12. |
| RPSM03110230 | ||
| RPSM03110240 | ||
| RPSM03110250 |
