[an error occurred while processing this directive]
[an error occurred while processing this directive]

3.1 Approval of Occupational Schemes

  • Governing legislation is under the Income and Corporation Taxes Act 1988, as amended by the Finance Act 1989 and subsequent Finance Acts.

  • Certain basic conditions need to be met before a pension scheme will be granted approval by the Inland Revenue Savings, Pensions, Share Schemes Department (IR SPSS):


    1. Must be established under irrevocable trusts to separate scheme assets from company assets.
    2. Employees eligible for membership must be given written details of the scheme features and conditions.
    3. An administrator, resident in the UK, must be appointed.
    4. The employer must pay at least 10% of the total contributions; individual contributions are not a requirement.
    5. The scheme is established by a UK resident in the UK for a business in the UK.
    6. Benefits do not exceed certain agreed criteria (see Revenue maximum benefits later).
    7. Contributions do not exceed certain agreed criteria.
    8. No pension can be totally surrendered for cash.
    9. No benefits are payable under the scheme other than members' and widow's/widower's pensions not exceeding a 1/60th per year of service formula.

  • Approval under the strict conditions of the 1988 Act is not usually sought, as more flexible benefits are generally desired. In any event, approval only provides that any employer contributions are not treated as a taxable benefit of the employee.

  • Usually, therefore, exempt approval is sought on a discretionary basis under the wide ranging powers of the PSO. These powers are set out in the guidelines of their Occupational Pensions Scheme Practice Notes IR12 (2001) and subsequent memoranda, and generally referred to as the Practice Notes.

[an error occurred while processing this directive]