TEESSIDE PENSION FUND

222 Pensionable Pay Vanessa Barker Training Co-ordinator February 2015

333 Pensionable Pay Pre 2014 final salary pensionable pay Post 2014 career average pensionable pay

444 Pensionable Pay Pre 2014 final salary pensionable pay Pensionable or not Full time or part time Reductions/restrictions Certificates of protection 13 year pay calculation

555 Pensionable Pay Post 2014 career average pensionable pay Pensionable or not Lump sum payments Contractual & non-contractual overtime Enhanced hours Assumed pensionable pay Cumulative pensionable pay

666 Pensionable Pay Actual calculation of pay Calculation of final pay pre2014 Calculation of final pay post 2014

777 Pensionable Pay Effects of periods of leave Paid leave Unpaid leave Maternity leave Additional maternity leave Strike leave Jury service Reserve forces leave

888 Pensionable Pay Effects of periods of leave Additional Pensions Contributions (APC) calculator

999 Pensionable Pay Refunds Under 3 months Over 3 months Under two years National Insurance earnings

10 Pensionable Pay Pension unit forms Starter Variation Estimate early retirement/redundancy costs purchase order box Leaver to pension Leaver not to pension Strike Maternity Ill health

11 Pensionable Pay Pre 2014 final salary pensionable pay Post 2014 career average pensionable pay What’s pensionable? Actual calculation of pay

12 Pensionable Pay Pre 2014 final salary pensionable pay Pensionable or not £2,500.00Salary Yes £ Performance-related Pay Yes £1,000.00Cash equivalent of lease car No £ Contractual Overtime Yes £ Travelling Expenses No £ Subsistence expenses No £ 14.00First Aid Allowance Yes £ Enhancement for weekend working Yes £ Non-contractual overtime No £5,993.75

13 Pensionable Pay (Pre 2014) PayPensionable? Basic SalaryYes Performance related payYes – if contractual Cash equivalent of a lease carNo Contractual overtimeYes Non-contractual overtimeNo Travelling expensesNo First aid allowanceYes Enhancement for weekend workingYes – if contractual Enhancement for working nightsYes – if contractual Sleep insYes – if contractual Subsistence or allowance paid in respect of expenses incurredNo Payment for loss of holidaysNo Payment in lieu of notice to terminate contract of employmentNo Any award of compensation (excluding any sum representing arrears of pay) for the purposes of achieving equal pay in relation to other employees. No Detriment payment?? BonusYes – if contractual Honoraria paymentYes – if in lieu of duties No - if instead of overtime Acting up payYes Market Pay SupplementYes Salary SacrificeYes – unless for a car CPD (Continual Professional Development)Yes

14 Pensionable Pay Post 2014 career average pensionable pay Pensionable or not £2,500.00Salary Yes £ Performance-related Pay Yes £1,000.00Cash equivalent of lease car No £ Contractual Overtime Yes £ Travelling Expenses No £ Subsistence expenses No £ 14.00First Aid Allowance Yes £ Enhancement for weekend working Yes £ Non-contractual overtime Yes £5,993.75

15 Pensionable Pay (Post 2014) PayPensionable? Basic SalaryYes Performance related payYes Cash equivalent of a lease carNo Contractual overtimeYes Non-contractual overtimeYes Travelling expensesNo First aid allowanceYes Enhancement for weekend workingYes Enhancement for working nightsYes Sleep insYes Subsistence or allowance paid in respect of expenses incurredNo Payment for loss of holidaysNo Payment in lieu of notice to terminate contract of employmentNo Any award of compensation (excluding any sum representing arrears of pay) for the purposes of achieving equal pay in relation to other employees. No Detriment payment Yes BonusYes Honoraria paymentYes Acting up payYes Market Pay SupplementYes Salary SacrificeYes – unless for a car CPD (Continual Professional Development)Yes

16 Pensionable Pay (1) An employee's pensionable pay is the total of-(1) Subject to regulation 21 (assumed pensionable pay), 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 (a) all the salary, wages, fees and other payments paid to the employee, and (b) any other payment or benefit specified in his contract of employment as being a pensionable emolument. (b) any benefit specified in the employee's contract of employment as being a pensionable emolument. (2) But an employee's pensionable pay does not include- (a) payments for non-contractual overtime;(a) any sum which has not had income tax liability determined on it; (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;(d) any payment in lieu of notice to terminate a contract of employment; (e) any payment as an inducement not to terminate his employment before the payment is made. (e) any payment as an inducement not to terminate employment before the payment is made; (f) the amount of any supplement paid- (i) by the Environment Agency; or (ii) to an employee whose employment is transferred on 1st April 2010, under a staff transfer scheme, from the Learning and Skills Council for England to a local authority or to London Councils Limited, in recognition of the difference in contribution rates between members of the principal civil service pension scheme and the Scheme; or (f) any amount treated as the money value to the employee of the provision of a motor vehicle or any amount paid in lieu of such provision; (g) any award of compensation (excluding any sum representing arrears of pay) for the purposes of achieving equal pay in relation to other employees. (g) any payment in consideration of loss of future pensionable payments or benefits; (3) No sum may be taken into account in calculating pensionable pay unless income tax liability has been determined on it. (h) any award of compensation (excluding any sum representing arrears of pay) for the purpose of achieving equal pay in relation to other employees; (4) In this regulation "local authority" has the same meaning as in regulation 16A. (i) any payment made by the Scheme employer to a member on reserve forces service leave; (j) returning officer, or acting returning officer fees other than fees paid

17 Pensionable Pay (pre 2014) Pre 2014 final salary pensionable pay Actual calculation of pay/final pay If the pay rates are as follows: 01/04/2014 to 31/03/2015 = £ /04/2015 to 30/11/2015 = £ /12/2014 to 31/03/2015 gives a number of days of 121 days 01/04/2015 to 30/11/2015 gives a number of days of 244 days 365 days 01/12/2014 to 31/03/2015 is 121 / 365 x £ = £ /04/2015 to 30/11/2015 is 244 / 365 x £ = £ Final salary pensionable pay £

18 Pensionable Pay (pre 2014) Pre 2014 final salary pensionable pay Part time 01/12/2014 to 31/03/2015 = £ /04/2015 to 31/03/2015 = £ shown as 30/37 01/12/2014 to 31/03/2015 = £ (£ / 30 hours x 37 hours) 01/04/2015 to 30/11/2015 =£ (£ / 30 hours x 37 hours) 01/12/2014 to 31/03/2015 is 121 / 365 x £ = £ /04/2015 to 30/11/2015 is 244 / 365 x £ = £ Final salary pensionable pay £

19 Pensionable Pay (pre 2014) Pre 2014 final salary pensionable pay Part time/term time 01/12/2014 to 31/03/2015 = £ /04/2015 to 31/03/2015 = £ hours per week for 44 weeks per year = 30 x 44/52.14 = shown as 25.32/ /12/2014 to 31/03/2015 = £ (£ /25.32 x 37) 01/04/2015 to 30/11/2015 =£ (£ / x 37) 01/12/2014 to 31/03/2015 is 121 / 365 x £ = £ /04/2015 to 30/11/2015 is 244 / 365 x £ = £ Final salary pensionable pay £

20 Pensionable Pay Reductions Restrictions Certificates of Protection 13 year Pay Calculation

21 Pensionable Pay (pre 2014) Pensions built up prior to 2014 are protected Pre 2008 protection Protection applies if, otherwise than by virtue of a member’s own circumstances- his/her rate of pay is reduced, or the rate at which it may be increased is restricted in such a way that it is likely that the rate of their retirement pension will be adversely affected, AND a certificate of protection of pensionable pay has been issued. (A certificate could only have been issued where the reduction or restriction in pay is enforced)

22 Pensionable Pay (pre 2014) Pre 2008 protection Protection did not apply where – a member takes a voluntary or temporary reduction in pay; or they are returning to their normal post after a temporary promotion; or they are simply reducing their working hours or weeks (and the whole time equivalent pay remains unchanged).

23 Pensionable Pay (pre 2014) Pre 2008 protection Must leave within 10 years of date of reduction/restriction Pay can be- Best single year in the last 5, OR Annual average of any consecutive 3 year period in the last 13 years Always ending with anniversary of date of leaving After allowing for PI – spreadsheet Certificate is transferable across employments where membership is aggregated

24 Pensionable Pay (pre 2014) Post 2008 protection Protection applies where a member’s pay in a *continuous period of employment is reduced or restricted- because the member chooses to be employed by the same employer at a lower grade or with less responsibility; for the purposes of achieving equal pay in relation to other employees of that employer; as a result of a job evaluation exercise; because a change in the member’s contract of employment resulting in the cessation or restriction of, or reduction in, payments or benefits specified in the member’s contract of employment as being pensionable emoluments; or because the rate at which the member’s rate of pay may be increased is restricted in such a way that it is likely that the rate of the member’s retirement pension will be adversely affected. *unless a person has changed employers in the last 10 years in circumstances where TUPE or the move is treated as a TUPE move applies, e.g. in a machinery of government change or contracting out exercise

25 Pensionable Pay (pre 2014) Post 2008 protection Protection does not apply where- the reduction/restriction immediately follows a period in which the member occupies a post on a temporary basis at a higher rate of pay; or the member chooses to reduce his or her hours of work or to be employed at a lower grade, for the purposes of flexible retirement; or they are simply reducing their working hours or weeks (and the whole time equivalent pay remains unchanged).

26 Pensionable Pay (pre 2014) Post 2008 protection Must leave within 10 years of reduction/restriction Pay can be- Annual average of any 3 consecutive years in the last 13 years Year ending 31 st March Not transferable – current employer only unless TUPE applies

27 Pensionable Pay (pre 2014) Pre 2008 & post 2008 protections Spreadsheet Password protected - penpay Remember: rights continue to apply even where the pay cut or restriction occurs after March 2014

28 Pensionable Pay (post 2014) Post 2014 career average pensionable pay Calculation of pensionable pay is basically the same But introduced in the CARE scheme is the ‘Career average pensionable pay’ (which is specific to a scheme year) i.e. the member’s pay from 01/04/20?? to 31/03/20?? or the date of leaving whichever is sooner.

29 Pensionable Pay (post 2014) Post 2014 career average pensionable pay 01/04/2014 = £ /04/2015 = £ Career average pensionable pay would be: £ for 01/04/2014 to 31/03/2015 £ for 01/04/2015 to 31/03/2016 *career average pensionable pay is specific to a scheme year

30 Pensionable Pay (post 2014) Post 2014 career average pensionable pay 01/04/2014 = £ /07/2014 = £ /04/2015 = £ Career average pensionable pay would be: 01/04/2014 to 31/03/2015 = £ (3/12 x /12 x ) 01/04/2015 to 31/03/2016 = £ *career average pensionable pay is specific to a scheme year

31 Pensionable Pay (post 2014) Post 2014 career average pensionable pay 01/04/2014 = £ /07/2014 = £ /04/2015 = £ member received non-contractual overtime payments of the following: February 2015 £98.00 March 2015 £53.00 June 2015£37.00 October 2015 £74.00 November 2015 £72.00 Career average pensionable pay would be: 01/04/2014 to 31/03/2015 = £ (3/12 x £ /12 x £ £ £53.00) 01/04/2015 to 31/03/2016 = £ (£ £37.00, £74.00 and £72.00)

32 Pensionable Pay (post 2014) Post 2014 career average pensionable pay Career average pensionable pay for a member leaving 30/11/2015 Career average for scheme year 1 April 2014 to 31/03/2015 = £ Plus overtime payments for the period = £ Career average pensionable pay for year 1/4/2014 to 31/3/2015 = £ *Pension will have already been calculated & credited to the member’s pension account for year Career average for scheme year 1 April 2015 to 30/11/2015 (date of leaving) 01/04/2015 to 30/06/2015 = 3/12 x = /07/2015 to 30/11/2015 = 5/12 x £ = £ Plus overtime payments for the period = £ ( ) = £ Career average pensionable pay for the year 1/4/2015 to 30/11/2015 = £ If you are completing monthly returns, you should be able to just lift these figures directly from your payrolls if the member has not had leave periods/nil/reduced pay

33 Pensionable Pay (post 2014) Post 2014 Assumed pensionable pay 01/04/2014 = £ /07/2014 = £ /04/2015 = £ member received non-contractual overtime payments of the following: February 2015 = £98.00, March 2015 = £53.00, June 2015 = £37.00 At 01/09/2015 member’s APP calculated due to pay drop for sickness Use previous three months June 2015 = £ (1/12 x = ) July 2015 = £ (1/12 x ) August 2015 = £ (1/12 x ) Total for previous three months = £ Assumed pensionable pay = /3 x 12 = £

34 Pensionable Pay (post 2014) Post 2014 Assumed pensionable pay ** Note: member would only pay a contribution on the pay that they receive from 01/09/2015 employer would pay a contribution on the APP they had just calculated Weekly, fortnightly, lunar, quarterly, half yearly Irregular pay frequencies Calculate the average pensionable pay for the 12 complete weeks prior to the relevant period Relevant period start date is the day the pay reduces or drops to nil This figure is then grossed up to an annual figure If 12 complete pay periods do not exist, an employer should use whatever number of complete periods are available and gross up to an annual figure ** Remove any payments that are not payable every pay period (referred to as lump sums)

35 Pensionable Pay (post 2014) Lump Sum Payments/contractual & non-contractual overtime/enhanced hours Month 1 = £1, Month 2 = £2, Month 3 = £1, £1, £2, £1, = £5,200.00/3 x 12 = £20, Annual Pay £1, x 12 + £1, annual bonus = £17, £1, £1, £1, = £4,200.00/3 x 12 = £16,800.00

36 Pensionable Pay (post 2014) Lump Sum Payments/contractual & non-contractual overtime/enhanced hours Month 1 = £1, (£ contractual overtime and £54.00 non- contractual) Month 2 = £2, (£ contractual overtime and £98.00 non- contractual and £1, annual bonus) Month 3 = £1, (£ contractual overtime and £32.00 non- contractual) £1, £1, £1, = £4,834.00/3 x 12 = £19, Note: Pre-2014 pensionable pay would not include the non-contractual overtime

37 Pensionable Pay (post 2014) Lump Sum Payments/contractual & non-contractual overtime/enhanced hours Employee’s salary = £ plus regular enhancements of 1.83 hours per week (£ per week + £18.32 enhancement) £ £18.32 = £ x 12 = £ /12 x = £ Use actual last twelve weeks if the enhancements are irregular payments

38 Pensionable Pay (post 2014) Cumulative pensionable pay total of career average pensionable pay and assumed pensionable pay if applicable

39 Pensionable Pay (post 2014) Cumulative pensionable pay 01/04/2012 = £ /04/2013 = £ /04/2014 = £ /07/2014 = £ /04/2015 = £ member received non-contractual overtime payments of the following: February 2015 £98.00 March 2015 £53.00 June 2015£37.00 October 2015 £74.00 November 2015 £72.00

40 Pensionable Pay (post 2014) Cumulative pensionable pay Career average pensionable pay Current scheme year 01/04/2015 to 31/12/2015 £ /12 x 9 = = £ Previous scheme year 01/04/2014 to 31/03/2015 £ /12 x 3 = £ /12 x 9 = = £ Direct from payroll.

41 Pensionable Pay (post 2014) Cumulative pensionable pay – sick leave 01/04/2012 = £ /04/2013 = £ /04/2014 = £ /07/2014 = £ /04/2015 = £ member received non-contractual overtime payments of the following: February 2015 £98.00 March 2015 £53.00 June 2015£37.00

42 Pensionable Pay (post 2014) Cumulative pensionable pay – sick leave At 01/09/2015 the APP is calculated Take previous three months June 2015 = £ (1/12 x = ) July 2015 = £ (1/12 x ) August 2015 = £ (1/12 x ) Total for previous three months = £ Assumed pensionable pay = /3 x 12 = £

43 Pensionable Pay (post 2014) Cumulative pensionable pay – sick leave Total of career average pensionable pay & APP Current scheme year 01/04/2015 to 31/12/2015 CAPP 01/04/2015 – 31/08/ /12 x = APP 01/09/2015 – 31/12/ /12 x 4 = =£ Previous scheme year 01/04/2014 to 31/03/2015 £ /12 x 3 = £ /12 x 9 = = £ Direct from payroll.

44 Pensionable Pay (post 2014) Assumed Pensionable Pay Nil Pay & ill health enhancements

45 Pensionable Pay (post 2014) Effects of periods of leave Sick leave Child related leave Maternity, paternity & adoption leave Additional paid maternity, paternity & adoption leave Additional unpaid maternity, paternity & adoptions leave Strike leave Jury service Reserve forces leave

46 Pensionable Pay (post 2014) Effects of periods of leave Sick leave Member pays on pay received Employer pays on APP Member will receive full pension benefits for the relevant period

47 Pensionable Pay (post 2014) Effects of periods of leave Child related leave Maternity, paternity & adoption leave Additional paid maternity, paternity & adoption leave Additional unpaid maternity, paternity & adoptions leave Member pays on pay received Employer pay on APP for paid leave Member accrues full pension benefits for the relevant period (paid leave) Member can purchase via APC any lost pension 1/3 rd cost to member & 2/3rds cost to employer if form returned to employer within 30 days of return to work

48 Pensionable Pay (post 2014) Effects of periods of leave Strike leave Member pays no contribution Employer pays no contribution Member can purchase lost pension via APC full cost to the member

49 Pensionable Pay (post 2014) Effects of periods of leave Jury service If paid by employer during jury service, contributions paid & benefits accrue as normal If member receives no pay from employer, member can purchase lost pension via APC

50 Pensionable Pay (post 2014) Effects of periods of leave Reserve forces leave APP calculated & dropped into the cumulative figure No contributions deducted even if reservist is paid by the employer APP advised to reservist & MOD, who deduct contributions from reservist & pay with their contribution direct to Teesside Pension Fund.

51 Pensionable Pay Effects of periods of leave Additional Pensions Contributions (APC) calculator

52 Pensionable Pay Refunds Under 3 months still in employment – refund through the payroll ceased employment – refund by TPF Over 3 months refund by TPF Contracted Out National Insurance earnings

53 Pensionable Pay Refunds Contracted Out National Insurance earnings Earnings between the ‘lower earnings limit’ (LEL) and the ‘upper earnings limit’ (UEL) on which contributions have been paid. Lower Earnings Limit (LEL) – The minimum amount set at the beginning of each tax year which must be earned in a pay period to qualify for a basic retirement pension Upper Earnings Limit (UEL) – NICs do not have to be paid by employees on earnings over a certain amount. This maximum amount is set at the beginning of each tax year and is about seven times the amount of the LEL. There is no UEL for employers.

54 Pensionable Pay Refunds Contracted Out National Insurance earnings 1bContracted Out Earnings above the LEL, up to and including the Earnings Threshold (column 1b – P11) + 1cContracted Out Earnings above the Earnings Threshold, up to and including the UEL (column 1c – P11) You are totalling all Contracted Out Earnings from the LEL to the UEL. UEL – Upper Earnings Limit Earnings Threshold LEL – Lower Earnings Limit 1c 1b 1a

55 Pensionable Pay Pension unit forms Reviewing Leavers splitting into two authorising pay details Completion notes will mirror training notes

56 FINALLY Questions Technical & Training Manager Heather Currie Local Government Technical Co-ordinator Craig Allison Technical & Training Section Tel: Evaluation Forms THANKYOU Vanessa Barker Training Co-ordinator February 2015

57 TEESSIDE PENSION FUND