Assumed Pensionable Pay
Assumed Pensionable Pay is a notional pensionable pay figure that is used to ensure that your pension is not affected if your pensionable pay reduces when you are away from work. It protects you if you are absent because of sickness or injury, relevant child-related leave or reserve forces leave.
Your employer must calculate the Assumed Pensionable Pay for the period of absence. To do this, your employer will normally calculate the average of the pensionable pay you received in the three months before your pay reduced. If you are paid weekly, they will use your pay in the 12 weeks before the pay reduction.
When calculating the average pensionable pay for the period before the pay reduction, your employer will ignore any reduction in pay due to an authorised absence or a trade dispute.
If the pay you received in the period before the pay reduction is materially lower than the pay you would normally receive, your employer has a discretion to use a higher pay to work out your Assumed Pensionable Pay. Your employer must have regard to your pensionable pay in the last year when determining what your ‘normal’ level of pensionable pay is.
Your basic pension contributions are based on the pay you actually receive, not on the Assumed Pensionable Pay.
Assumed Pensionable Pay – an example
A member’s pensionable pay is reduced to half pay for the period 1 July to 31 December due to sickness absence. The employer calculates the Assumed Pensionable Pay by working out the average of the pensionable pay in the three months before the pay reduction.
- April pensionable pay: £1,190
- May pensionable pay: £1,190
- June pensionable pay: £1,322
Monthly Assumed Pensionable Pay is: £1,190 + £1,190 + £1,322 = £3,702 ÷ 3 = £1,234.
The employer would inform the member’s pension fund that the Assumed Pensionable Pay for the period 1 July to 31 December is £1,234 × 6 months = £7,404.