RPSM03301100 - Scheme Administrator Pages: Protecting pension rights from tax charges: Valuing pension rights: MPP and preservation

Maximum permitted pension and the effects of preservation on money purchase schemes

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

DWP preservation requirements may mean that the N/NS x P limit does not apply where benefits are provided under a money purchase arrangement.

The particular form of the preservation calculation to be used depends on when the retirement benefits scheme was approved. The relevant preservation calculation will be the one published in whichever version of the IR 12 “Occupational Pension Schemes Practice Notes” was in force when the scheme was approved. RPSM03101550 to RPSM03101570 detail the preservation limits that apply from 1 October 1974 to 5 April 2006.