What pay is pensionable?
Under the LGPS (Benefits, contributions and membership) Regulations 2007 the definition of pensionable pay is given in the excerpts below:
Meaning of “pensionable pay”
4.—(1) An employee’s pensionable pay is the total of—
(a) all the salary, wages, fees and other payments paid to him for his own use in respect of his employment; and
(b) any other payment or benefit specified in his contract of employment as being a pensionable emolument.
(2) But an employee’s pensionable pay does not include—
(a) payments for non-contractual overtime;
(b) any travelling, subsistence or other allowance paid in respect of expenses incurred in relation to the employment;
(c) any payment in consideration of loss of holidays;
(d) any payment in lieu of notice to terminate his contract of employment; or
(e) any payment as an inducement not to terminate his employment before the payment is made.
(f) any payment by way of compensation for the purposes of achieving equal pay in relation to other employees.
(3) No sum may be taken into account in calculating pensionable pay unless income tax liability has been determined on it.
Note (not part of the regulation):
i) Contractual and non-contractual bonuses are pensionable under 4-1(a).
ii) Pensionable pay is unaffected by most 'Salary Sacrifice' schemes that apply. That is to say, the pension contributions will still be deducted before any salary sacrifice amount, income tax and national insurance contributions.
iii). 4(2)f is an amendment made in December 2009, backdated to April 2008. This has caused significant confusion amongst administrators and hence the LGE has produced guidance on the intended meaning of this regulation:
Wiltshire Pension Fund, Wiltshire Council - Bythesea Road,Trowbridge, Wiltshire, BA14 8JJ.
© 2009 Wiltshire Pension Fund.