Away From Work - Assumed Pensionable Pay
Assumed pensionable pay is a notional pensionable pay figure that is used to ensure that your pension is not affected by any reduction to, or suspension of, your pensionable pay due to a period of sickness or injury, or any reduction due to relevant child related leave or reserve forces leave.
Your employer is required to calculate the assumed pay for the period of absence. To do this your employer will normally calculate the average of the pensionable pay you received for the 3 months (or 12 weeks if you are paid weekly) before the pay period in which your pay reduced.
A member's pensionable pay is reduced due to half pay for the period 1st July to 31st December due to sickness absence. The employer calculates the assumed pensionable pay by calculating the average of the three complete months' pensionable pay received before the pay period in which the pay is reduced.
- April pensionable pay = £1,200
- May pensionable pay = £1,200
- June pensionable pay = £1,300
(In this case the member's pay increased from 1st June to £1,300 per month (£15,600 per year) due to an annual pay award.)
Therefore, £1,200 + £1,200 + £1,300 = £3,700 divided by 3 = £1233.33 per month. The employer would inform the member's pension fund that the assumed pensionable pay for the period 1st July to 31st December is £1233.33 x 6 (months)= £7399.98.
The member pays their basic pension contributions on the reduced pay they actually receive.
When calculating the average pensionable pay you receive for the 3 month period (or 12 weeks if you are paid weekly) before your pay reduced, any reduction in pay due to an authorised absence or a trade dispute is ignored.
In addition, if the pay you receive in the 3 month period (or 12 weeks if you are paid weekly) is materially lower than the pay you would normally receive, your employer has a discretion to use a higher pay in the calculation above. Your employer must have regard to the pensionable pay you earned over the previous 12 months when determining what your normal level of pensionable pay is.