Final Remuneration may be computed on one of the following bases, viz:
(i) (a) Basic remuneration over any twelve month period of the five years preceding the relevant date (i.e. the date of retirement, leaving service or death, as the case may be),
PLUS
(b) the average of any fluctuating emoluments over three or more consecutive years ending on the last day used in (a) above.
(ii) The average of the total emoluments for any three or more consecutive years ending not earlier than 10 years before the relevant date.
(iii) The rate of basic pay at the relevant date or at any date within the year ending on that date plus the average of any fluctuating emoluments calculated as in (i) above.
Provided that-
(i) Basis (iii) cannot be used where within three years before the relevant date an employee:
(a) Was promoted or received a special increase in basic pay, and
(b) The total increase over the relevant three year period is greater than it would have been if the remuneration on the day of commencement of the period had been increased proportionately to the increase in the Consumer Price Index, or to increase applicable to the employment under a National Wage Agreement, during the same three year period.
However, it is possible to agree beforehand with Revenue that such increases, if given on a recognised scale applicable to defined groups of arm’s-length employees, will not prevent the availability of basis (iii).
(ii) Wheneverfinal remuneration is calculated by reference to a year or years other than the 12 months ending with the relevant date, each such year's remuneration may be increased in proportion to the increase in the cost of living from the last day of that year up to the relevant date referred to as "dynamised" final remuneration. This also applies to fluctuating emoluments so that fluctuating emoluments of a year other than the twelve months ending with the relevant date may be increased as detailed above.
(iii) In the case of a 20% director -
(a) the scheme may not adopt either of the bases (i) or (iii), and
(b) Proviso (ii) above may not be applied unless it can be shown to the satisfaction of Revenue that the amount of the non-commutable pension payable or remaining payable or payable before the application of rules permitting commutation of the whole of the benefits to the director is not less than two-thirds of the annuity equivalent of all retirement benefits payable to the director (or to which he is entitled) under all schemes of the employer at the time any lump sum benefits are to be paid to him under the rules.
(iv) Where sick pay is drawn for 10 or more years (under, say, a sick pay or permanent health insurance scheme) and the member is regarded as continuing in service, "final remuneration" may be calculated by reference to the employee's pay for a selected period as detailed above before the date on which he dropped from full pay to sick pay. This figure may be increased proportionately to increases in the Consumer Price Index between the relevant dates.