Assumed Pensionable Pay
Assumed Pensionable Pay is used to work out the increase to your pension when you are awarded Tier 1 or 2 ill health benefits. Assumed Pensionable Pay is the average pay you receive in the period before you leave due to ill health retirement. It is based on three months’ pay if you are paid monthly or 12 weeks’ pay if you are not paid monthly.
There are sometimes adjustments to the calculation of Assumed Pensionable Pay:
- If your pensionable pay was reduced because you were away from work, your employer will generally ignore the reduction when it works out your Assumed Pensionable Pay. This will be the case if you are absent because of sickness or injury, authorised unpaid leave or trade dispute.
- If the pay you received in the period leading up to your leaving date is lower than the pay you would normally receive, your employer can use a higher pay to work out your Assumed Pensionable Pay. Your employer must have regard to the pensionable pay you received in the last 12 months when they do this.
- You may have been working reduced hours in the period leading up to your leaving date. An independent medical practitioner must certify whether you were working reduced hours because of the condition that led to your ill health retirement. If you did reduce your working hours because of that condition, your employer will work out your Assumed Pensionable Pay based on the pay you would have received if your hours had not been reduced.