DEFINITION
Earnings Cap

"Earnings cap": Pensions. A former limit (in the UK) on the amount of pensionable remuneration on which the benefits and contributions of a member could be based, which applied to periods up to April 2006. The earnings cap has been replaced by the lifetime allowance and the annual allowance limits. However, many company and public sector defined benefit pension schemes may continue to use the earnings cap in order to restrict pension contributions and pension benefits payable. Other employers and pension schemes may choose to set their own earnings caps, resulting in similar effective restrictions.
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