1. Welcome to the Pensionable Pay Workshop Heather Page and Sue Merrett

2. What is Pensionable Pay? Pensionable Pay is the total of all the salary, wages, fees and includes any benefit specified in the employees contract of employment as being a pensionable emolument. Pensionable Pay should NOT include payments such as: Travel expenses Holiday Pay For a full list of what shouldn’t be included please visit www.lgpsregs.orgwww.lgpsregs.org

3. Final Pay The employer is responsible for calculating and providing the Final Pay figures to the Pension Fund. They will provide Final Pay at each 31 st March for Year End and also when a member opts out, leaves or attains age 75. Final Pay is used to calculate any pre 2014 benefits the member may have built up. The Final Pay is usually the last 12 months pay. The employer must check if the member had an periods of unpaid leave and whether the ‘lost’ pension was paid back. If it was paid back then the Final Pay must be treated as if the member was not absent. If it was not paid back hen the pay received is divided by the number of paid days multiplied by 365. If the member is part time you must provide the Full Time Equivalent (FTE) figures

4. Final Pay – Examples Member A left the Pension Scheme on 31/03/2015 In the last 12 months their FTE was as follows: 01/04/2014 to 30/06/2014 £14,829 01/07/2014 to 31/03/2015 £15,026 There was no unpaid leave for this period 01/04/2014 to 30/06/2014 £14,829 / 12 x 3 = £3,707.25 01/07/2014 to 31/03/2015 £15,026 / 12 x 9 = £11,269.50 Final Pay = £14,976.75 Member B left the Pension Scheme on 31/03/2015 They had a period of unpaid leave from 01/01/2015 to 31/01/2015. They did not pay back the ‘lost’ pension costs. In the 12 months their FTE was as follows: 01/04/2014 to 30/06/2014 £14,829 01/07/2014 to 31/03/2015 £15,026 01/04/2014 to 30/06/2014 £14,829 / 12 x 3 = £3,707.25 01/07/2014 to 31/12/2014 £15,026 / 12 x 6 = £7,513 01/01/2015 to 31/01/2015 unpaid leave of 31 days 01/02/2015 to 31/03/2015 £15,026 / 12 x 2 = £2,504.33 Final Pay = £13,724.58 / 334 x 365 = £14,998.41 Please do the Final Pay calculations on your worksheets

5. Final Pay – Answers Member C left the Pension Scheme on 15/07/2015 In the last 12 months the FTE was as follows: 16/07/2014 to 31/03/2015 £14,829 01/04/2015 to 15/07/2015 £15,026 There was no unpaid leave for this period 16/07/2014 to 31/07/2014 £14,829 / 12 / 31 x 16 = £637.81 01/08/2014 to 31/03/2015 £14,829 / 12 x 8 = £9,886 01/04/2015 to 30/06/2015 £15,026 / 12 x 3 = £3,756.50 01/07/2015 to 15/07/2015 £15,026 / 12 / 31 x 15 = £605.89 Final Pay = £14,886.20 Member D left the Pension Scheme on 15/07/2015 In the last 12 months the FTE was as follows: 16/07/2014 to 31/03/2015 £14,829 01/04/2015 to 15/07/2015 £15,026 They had a period of unpaid leave from 01/01/2015 to 31/01/2015 and 06/04/2015 to 24/04/2015. They did not pay back the ‘lost’ pension costs 16/07/2014 to 31/07/2014 £14,829 / 31 x 16 = £637.81 01/08/2014 to 31/12/2014 £14,829 / 12 x 5 = £6,178.75 01/01/2015 to 31/01/2015 Unpaid leave of 31 days 01/02/2015 to 31/03/2015 £14,829 / 12 x 2 = £2,471.50 01/04/2015 to 05/04/2015 £15,026 / 12 / 30 x 5 = £208.69 06/04/2015 to 24/04/2015 Unpaid leave of 19 days 25/04/2015 to 30/04/2015 £15,026 / 12 / 30 x 6 = £250.43 01/05/2015 to 30/06/2015 £15,026 / 12 x 2 = £2,504.33 01/07/2015 to 15/07/2015 £15,026 / 12 / 31 x 15 = £605.89 Final Pay = £12,857.40 / 315 x 365 = £14,897.79

6. Cumulative Pensionable Pay Cumulative Pensionable Pay (CPP) was introduced from 01/04/2014 CPP includes any amount specified in the contract as being pensionable, it should also include the pensionable value of salary sacrifice items such as child care vouchers CPP must be provided separately for each job and for each section of the Scheme (Main or 50/50 Scheme) Any Pensionable Pay that was paid after 31/03/2014 but relates to a period before 01/04/2014 should NOT be included in CPP Please do the CPP calculation on your worksheet.

7. Cumulative Pensionable Pay – Answers Calculate the CPP for this employee: An employee starts on 1 st April 2014 in the main scheme. 3 months later they opt to pay into the 50/50 section. The remain in this section for 6 months and the remaining 3 months of the year they opt back in to the main section. April – June £3,000 CPP July – December £6,000 CPP January – March £3,300 CPP Show the CPP figure(s) that you would provide: CPP Main = £6,300 CPP 50/50 £6,000

8. Assumed Pensionable Pay Assumed Pensionable Pay (APP) is the pay calculated when a member has had a period of reduced or nil pay as a result of sickness, injury, child related leave or whilst on reserve forces service leave APP is calculated as an annual rate and proportioned depending on the relevant period For weekly paid employee’s calculate the average of the Pensionable Pay for 12 complete weeks before the event of reduced/nil pay. Do not include any pensionable lump sum payments. Gross the figure up to an annual figure. If 12 weeks does not exist use whatever period is available and gross the figure up to an annual figure. For monthly paid employee’s calculate APP as above but use 3 complete monthly pay periods

9. Assumed Pensionable Pay – Examples EXAMPLE A - Example of a monthly paid employee: 3 months pay before the relevant event Month 1 = £1,400 Month 2 = £2,500 (includes £1,000 regular bonus and £100 overtime) Month 3 = £1,400 APP is calculated as follows: ((£1,400 + £1,500 + £1,400) / 3 x 12) = £17,200 PLEASE NOTE: £1,000 bonus is removed before calculating APP. EXAMPLE B - Lump sums can be added back in, at the employers sole discretion, if they determine that the regular lump sum payment received would be paid again during the period where APP applies. If the employer can reasonable asses that the period of APP will extend to 11 months or more and that the bonus would be paid again then the amount can be added back in to the APP rate as follows: ((£1,400 + £1,500 + £1,400) / 3 x 12) = £17,200 + £1,000 (future bonus) = £18,200. It is expected that the amount of such cases will be small. Please now do the calculations on your worksheets

10. Assumed Pensionable Pay – Answers Now calculate the following assuming that the employer will not be adding the bonus back in to the APP: Monthly paid employee: Month 1 = £1,200 Month 2 = £2,300 (includes £1,000 regular bonus and £100 overtime) Month 3 = £1,300 (includes £100 overtime) ((£1,200 + £1,300 + £1,300) / 3 x 12 ) = £15,200 Weekly paid employee: Week 1 = £385 Week 2 = £385 Week 3 = £435 (includes £50 overtime) Week 4 = £385 Week 5 = £485 (includes £100 regular bonus) Week 6 = £435 (includes £50 overtime) Week 7 = £385 Week 8 = £385 Week 9 = £435 (includes £50 overtime) Week 10 = £385 Week 11 = £385 Week 12 = £435 (includes £50 overtime) Total amount = £4,820 (£4,820 / 12 x 52) = £20,886.67

11. EXAMPLE C – Calculating APP for employee’s on long term sick leave: Assume that the APP has been calculated as per example B (£18,200) and that the employee goes on to reduced pay on 15/06/2014. By 31/03/2015 the member is still on sick leave and is now on nil pay. At this point the APP is not increased and remains on £18,200. If the employee is still on sick leave by the subsequent 31 st March then the APP is adjusted by the annual increase. The employee returns to work on 04/09/2015. APP is worked out as follows: June – 14 days of Pensionable Pay plus 16 days at the APP rate (£18,200) July to March - £18,200 April to March - £18,200 April to August - £18,564 September – 3 days APP (£18,564) plus 27 days of Pensionable Pay Calculating APP as above also applies to employees on child related leave or reserve forces special leave.

12. Please now do the final calculation on your worksheets. This calculation incorporates an employee who went on maternity leave, had a period of unpaid maternity leave and has pre and post 2014 service. You will need to calculate the relevant Pensionable Pay figures that you would provide to Pensions so that they can process the leaver.

13. Final Calculation for a Leaver – Answers Calculate the various pay figures that you would need to provide to Pensions based on the following information. A female member has been employed and paying into the Scheme since 05/09/2004. She is full time and paying in to the main scheme. She was on maternity leave which started on 22/08/2014 and ended on 21/05/2015. The member had unpaid additional maternity leave from 22/05/2015 to 26/06/2015. She did not pay back the cost of ‘lost’ pension. She returned to work and then left on 28/08/2015. The annual pay rates are as follows: 01/04/2014 £14,829 01/04/2015 £15,026 This was her highest pay throughout her employment. The 3 full months pay before reduction were as follows: May 2014 £1,235.75 June 2014 £1,235.75 July 2014 £1,235.75

14. Final Calculation for a Leaver – Answers continued Final Pay: 29/08/2014 to 31/08/2014 £14,829 / 12 / 31 x 3 = £119.59 01/09/2014 to 31/03/2015 £14,829 / 12 x 7 = £8,650.25 01/04/2015 to 30/04/2015 £15,026 / 12 x 1 = £1,252.17 01/05/2015 to 21/05/2015 £15,026 / 12 / 31 x 21 = £848.24 22/05/2015 to 26/06/2015 Unpaid additional Maternity Leave 36 days 27/06/2015 to 30/06/2015 £15,026 / 12 / 30 x 4 = £166.96 01/07/2015 to 31/07/2015 £15,026 / 12 x 1 = £1,252.17 01/08/2015 to 28/08/2015 £15,026 / 12 / 31 x 28 = £1,130.99 £13,420.37 / 329 x 365 = £14,888.86 APP/CPP: (£1,235.75 + £1,235.75 + £1,235.75) / 3 x 12 = £14,829 Pay rate for Maternity period. 01/04/2014 to 31/03/2015 01/04/2014 to 31/07/2014 £14,829 / 12 x 4 = £4,943 01/08/2014 to 21/08/2014 £14,829 / 12 / 31 x 21 = £837.12 22/08/2014 to 31/08/2014 (now on maternity leave) £14,829 / 12 / 31 x 10 = £398.63 01/09/2014 to 31/03/2015 £14,829 / 12 x 7 = £8,650.25 £4,943 + £837.12 + £398.63 + £8,650.25 = £14,829

15. Thank you for attending the Pensionable Pay Workshop. If you have any queries or need any further information please contact the Employers Team: Web: http://pensions.cambridgeshire.gov.ukhttp://pensions.cambridgeshire.gov.uk http://pensions.northamptonshire.gov.uk http://www.lgpsregs.orghttp://www.lgpsregs.org – HR and Payroll Guides plus Administration Guide Email: penemployers@northamptonshire.gov.ukpenemployers@northamptonshire.gov.uk Besargent@northamptonshire.gov.uk Cblose@northamptonshire.gov.uk Phone: 01604 366537 (General) 01604 363418 (Beth) 01604 367264(Cory)