A registered pension scheme is not authorised to borrow an amount in respect of a money purchase (see ¶375-750) or cash balance arrangement (see ¶375-800) unless the total borrowings do not exceed 50 per cent of the value of the arrangement. Where borrowings exceed that limit a scheme chargeable payment (see ¶381-700) is deemed to have been made (FA 2004, s. 182(1), (2); 183(2)).

The amount of the scheme chargeable payment is the excess of the scheme’s borrowing over the value of the arrangement immediately before the borrowing, or further borrowing takes place (FA 2004, s. 183).

The value of the arrangement is the aggregate of the following values:

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