NIM02795 - Class 1 NICs: earnings of employees and office holders: retirement benefits schemes from 6th April 2006: employer-financed pension only schemes: definition
Paragraph 9(2) 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)
An employer-financed pension only scheme (“EFPOS”) is a scheme which:
- is financed by payments made by, or on behalf of, the secondary contributor; and
- provides only a pension.
Because such a scheme provides only a pension, this means it is not an employer-financed retirement benefits scheme (“EFRBS”) because it does not provide “relevant benefits” (NIM02756). This is because the definition of “relevant benefits” specifically excludes a pension which is taxable under Part 9 of ITEPA 2003 (see EIM15021 (point 2)).
For the purposes of the provision, “pension” does not include a pension that is commuted to a lump sum. If the pension is so commuted, then the scheme is an EFRBS and not an EFPOS.
For details of the NICs position on: