Paragraph 3

Subject to subparagraph (3) and to paragraph 4, “Final remuneration” means the greater of A and B, where—

• A is the participator’s highest year’s adjusted salary in respect of pensionable employment , or salary in respect of a period of contributions under regulation C8 of the 1992 Regulations, during the period of 5 years ending on the material date, and

• B is the average of the participator’s salary for any period of 3 or more consecutive years ending no earlier than 10 years before the material date,

In this paragraph “adjusted salary” means

$$\mathrm{C}+\mathrm{D}\text{,}$$

where—

• C is the participator’s total taxable salary for the year in question less any bonus payments and payments for overtime (“fluctuating emoluments”), and

• D is the average, for a period ending with the year in question, of any fluctuating emoluments; the period is one of at least 3 years or, if shorter, the period during which the fluctuating emoluments have been payable,

• and “the material date” means the earliest of—

  1. (a)

     the retirement date;

  2. (b)

     the date on which the retirement pension under these Regulations commenced; and

  3. (c)

     the date on which the participator ceased to be in pensionable employment or, as the case may be, to contribute under regulation C8 of the 1992 Regulations.

In respect of the year 1987/88 and following years, “final remuneration” shall not include any sums chargeable to tax under section 148 of the Taxes Act or chargeable under Schedule E to Part I of the Taxes Act and arising from the acquisition or disposal of shares, or an interest in shares, or from a right to acquire shares except where the shares or rights etc which give rise on or after 17 March 1987 to a Schedule E tax liability had been acquired before that date.