Pensionable pay within the LGPS has two definitions based on the regulations in place – the 2008 and 2014 scheme definitions.
The definition of pensionable pay in the 2014 scheme is very similar to the 2008 scheme. See below for the differences.
Pensionable pay and assumed pensionable pay
What's pensionable pay?
What is the definition of pensionable pay in the 2008 regulations?
An employee’s pensionable pay is the total of:
- All salary, wages, fees and other payments paid to the employee
- Any other payment or benefit mentioned in the employee’s contract as being pensionable
But an employee’s pensionable pay doesn’t include:
- Payments for non-contractual overtime;
- Any travelling, subsistence or other allowance paid in respect of expenses incurred in relation to the employment
- Any payment in consideration of loss of holidays
- Any payment in lieu of notice to terminate his or her contract of employment
- Any payment as an inducement not to terminate his employment before the payment is made
- The amount of any supplement paid –
-By the environment agency
-To an employee in recognition of the difference in contribution rates between, members of the Principal Civil Service Pension Scheme and the LGPS. These would be members that have transferred on 1 April 2010, under a staff transfer scheme from the Learning and Skills Council for England, to either a local authority or London Council Limited
-Any award of compensation (excluding any sum representing arrears of pay) to achieve equal pay in relation to other employees.
What is assumed pensionable pay from April 2014 onwards?
Assumed pensionable pay is the pay the employee would have had in cases of reduced contractual pay or nil pay because of sickness or injury; or during relevant child related leave (i.e. ordinary maternity, paternity or adoption leave, and any paid additional maternity, paternity or adoption leave).
When does assumed pensionable pay apply?
Assumed pensionable pay will normally be used where the member has gone on to reduced or no pay. This may be where:
- The member is on leave due to sickness or injury and is on reduced contractual pay or no pay
- The member is on relevant child-related leave (i.e. ordinary maternity, paternity or adoption leave and any paid additional maternity, paternity or adoption leave, but NOT unpaid additional maternity leave)
- The member is absent on reserve forces services leave
- For ill-health tiers 1 & 2 and death in service
For all tier 1 and 2 ill-health retirements and death in service cases, we'd work out the ill-health enhancements and death grants respectively using assumed pensionable pay.
How is assumed pensionable pay worked out?
Assumed pensionable pay considers what a person would have been earning if they'd worked as normal. Assumed pensionable pay should be worked out as an annual rate then applied to the relevant period as a proportion of that rate. Examples of how to work this out (including any employee whose pay periodically is other than monthly (e.g. weekly, fortnightly, lunar, quarterly, half yearly) can be found on the lgpsregs.org website.