Pensionable pay is the pay that pension is assessed on. There are different definitions of what’s pensionable for the Local Government Pension Scheme (LGPS). These are based on the regulations in place at the time your employees paid LGPS contributions.
When an employee leaves or opts out of the LGPS, you need to tell us on a leaver notification form, what the pensionable pay was under both definitions. This is because, unless they are very young, it’s likely they had some membership prior to 1 April 2014, which retains a final salary link.
CARE Pay - effective 1 April 2014
In line with the 2013 LGPS Regulations (Regulation 20), your employees should pay pension contributions on their:
- normal salary or wages
- bonuses
- overtime (both contractual and non-contractual)
- pay for additional hours (if your employee works part time)
- maternity, paternity, adoption, and shared parental pay
- shift allowances
- taxable benefits specified as pensionable in an employee’s contract
Your employees shouldn't pay pension contributions on:
- any travelling or subsistence allowances
- pay in lieu of notice
- pay in consideration of loss of holidays
- pay as an inducement not to leave before the payment is made
- any award of compensation made for the purpose of achieving equal pay, other than a payment representing arrears of pay
- pay relating to loss of future pensionable payments or benefits
- pay for reserve forces leave
- the monetary value of a car or pay received in lieu of a car
- any sum which has not had tax liability determined on it
Final Pay - effective 1 April 2008
In line with the 2007 LGPS Regulations (Regulation 4), your employees’ pension benefits built up to 31 March 2014 are based on:
- normal salary or wages
- bonuses
- contractual overtime
- maternity, paternity, adoption, and shared parental pay
- shift allowances (if defined as pensionable in the contract of employment)
- any other payment or benefit specified as pensionable in the contract of employment
The following is not included in Final Pay:
- non-contractual overtime
- pay in lieu of notice
- any travelling or subsistence allowances
- pay in consideration of loss of holidays
- pay as an inducement not to leave before the payment is made
- any award of compensation made for the purpose of achieving equal pay, other than a payment representing arrears of pay
- the amount of any supplement paid (For example, by the Environment Agency or the difference in contribution rates between the Principal Civil Service Pension Scheme and the LGPS)
- Assumed Pensionable Pay (APP)