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HMRC internal manual

National Insurance Manual

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: payments under a pension sharing o

Paragraphs 8(b), 10(4)(c) 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)

Section 164(e) Finance Act 2004

Section 28(1) Welfare Reform and Pensions Act 1999

Article 25(1) of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (SI1999/3147 (N.I. 11))

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 (“RPS”;NIM02715), the payment would have been an authorisedmember payment of the type shown there. One of those types of payment is apayment made under a pension sharing order or provision as set out in thelast two legislative provisions above.

In broad terms, those (legislative) provisions activate the “pension sharingmechanism” as a result of:

  • a pension sharing order by a court; or
  • an agreement between the divorcing couple.
  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.