Class 1 NICs: earnings of employees and office holders: retirement benefits schemes from 6th April 2006: employer-financed retirement benefits schemes: payments from such schemes: authorised member payments: pension commencement lump sums
Paragraphs 8(b), 10(4)(b) and (5)(b), and (6) of Part 6 of Schedule 3 to the SocialSecurity (Contributions) Regulations 2001 (as inserted by regulation 8(7) of the SocialSecurity (Contributions) (Amendment No. 2) Regulations 2006)
Sections 164(b) and 166(1) of, paragraph 1 of Schedule 28 and paragraphs 1-3 ofSchedule 29, as modified by paragraph 10 above, to Finance Act 2004
NIM02765 explains that, subject to the satisfaction of other conditions, a paymentout of an employer-financed retirement benefits scheme is disregarded in the calculationof earnings if, had the scheme been a registered pension scheme (NIM02715), the payment would have been an authorisedmember payment of the type shown there. One of those types of payment is a pensioncommencement lump sum which would have satisfied the following conditions:
- the individual becomes entitled to it in connection with their becoming entitled to a “relevant pension”
- it is paid within three months of the individual becoming entitled to it
- it is paid when the individual has reached normal minimum pension age unless they satisfy the ill-health condition (paragraph 1 of Schedule 28; RPSM08100070);
- it is paid before the individual has reached age 75
- the amount must not exceed the “permitted lump sum” (“PLS”; NIM02770). If the amount of the lump sum exceeds the PLS, then no amount can be disregarded in the calculation of earnings.
Here, “relevant pension” means:
For the meaning of “normal minimum pension age”, see NIM02767(pension rule 1).
|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.|