A lump sum of more than 3/80ths of final remuneration (a measure
of pensionable earnings) for each year of pensionable service
cannot be given to a pre-1987 member without taking account of any
retained benefits paid or payable in lump sum form. In some
circumstances the prospective lump sum rights payable for a current
employment must be reduced because of the value of an
individual’s retained benefits.
When calculating the maximum permitted lump sum for pre-1987
members, retained benefits may be ignored for any individual,
including a controlling director, whose P60 earnings from a
pensionable employment did not exceed £50,000 for the 2004/05
year of assessment. If the pensionable employment was not
continuous for the whole of 2004/05 an annual rate for the P60
earnings must be calculated on a pro rata basis.
For individuals, including controlling directors, whose
pensionable employment ceased before 6 April 2004, retained
benefits may be ignored if their P60 earnings in the last complete
year of assessment for the employment did not exceed £25,000,
or if they qualified for the retained benefit disregard in Part 7
of IR12 “Occupational Pension Schemes Practice Notes”.
Retained benefits should always be ignored when calculating
the maximum permitted lump sum for 1987 members and 1989 members.
The definition of pre-1987, 1987 and 1989 members is in
Appendix I of the IR 12 “Occupational Pension Schemes
Practice Notes” (2001).
| Glossary ( RPSM20000000) |
