RPSM03110240 - Technical Pages: Protecting
pension rights from tax charges: Retained benefits practice before
6 April 2006: Additional easements
Additional easement concerning pension debits effective from 10
May 2000
7.7 Under a further administrative easement, pension debits can
be ignored in calculating the member's maximum permissible total
benefits, both pension and lump sum under paragraph 7.2. This
easement applies to members of schemes other than simplified
defined contribution schemes except members:
- Who are controlling directors (within the
meaning in regulation 5(5) of the Retirement Benefits Schemes
(Sharing of Pensions on Divorce or Annulment) Regulations 2000 No
1085), or
- Whose earnings exceed I/4, of the
permitted maximum determined at its level for the year of
assessment in which the marriage was dissolved. For this purpose
earnings mean:
- those in respect of pensionable service to which
the scheme relates, and
- which were received during the year of assessment
immediately preceding the year of assessment in which the
dissolution or annulment of the marriage occurred, and
- from which tax was deducted under PAYE.
The test is applied as at the date of divorce and once it is
satisfied, the pension debit may be permanently ignored i.e.
irrespective of subsequent employment changes.
This administrative easement will not generally be capable of
being applied where the divorced member has already retired and is
in receipt of benefits. In these circumstances, for the purposes of
determining the member's maximum approvable benefits in accordance
with paragraph 9.1, the pension debit must always be brought into
account.
