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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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Earnings of employees and office holders: retirement benefits schemes from 6th April 2006 - employer-financed retirement benefits schemes: overview

Paragraphs 8 and 10 of Part 6 of Schedule 3 to the Social Security (Contributions)Regulations 2001 (as inserted by regulation 8(7) of the Social Security (Contributions)(Amendment No. 2) Regulations 2006)

From 6th April 2006, the Class 1 NICs position on a payment into, and out of, an employer-financed retirement benefits scheme (“EFRBS”) is substantially different to that which applies to a funded unapproved retirement benefits scheme (“FURBS”) before that date.

In broad terms, from that date:

  • a payment into an EFRBS is disregarded in the calculation of an employee’s earnings for Class 1 NICs purposes
  • a payment out of an EFRBS will also be disregarded in the calculation of earnings if:


  • had the scheme been a registered pension scheme (“RPS”; NIM02715), the payment would have been among the types of payment that a RPS is permitted to make; such payments are called “authorised member payments”; and
  • satisfies certain other conditions
  • is made after the employee’s employment has ended; and
  • is not made in respect of a period during which the employee is re-employed by the secondary contributor from employment with whom the pension benefits are derived.
  • the definition of an EFRBS, see NIM02756
  • details of:


  • the types of authorised member payments that may be disregarded and the other conditions that need to be satisfied, see NIM02760 (contents)
  • an overview of the Class 1 NICs position on payments into, and out of, a FURBS before 6th April 2006, see NIM02156.


Words in bold are defined in the Glossary to the Registered Pension Schemes Manual (RPSM20000000). They have the same meaning for NICs purposes unless otherwise stated.