HMRC has confirmed that the notional earnings cap for the tax year 2010/11 will be £123,600 - this is the last year that a notional earnings cap will be published. Following A Day (6 April 2006), the earnings cap disappeared but many schemes’ rules continue to rely upon the notional earnings cap and other limits permitted under the Registered Pension Schemes (Modification of Existing Schemes) Regulations 2006 (Modification Regulations) to restrict benefits.

From 5 April 2011, the transitional period will end and the Modification Regulations will no longer apply. This means that schemes with rules that rely on the Modification Regulations for the earnings cap and other limits will need to implement amendments in order to include, for example, their own scheme-specific earnings cap.

View HMRC note.