Pensions

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Reckonable pay FAQs

This set of FAQs is only relevant for Secondary Care doctors in the 2008 section of the scheme.

What is reckonable pay?
Which elements of my pay are pensionable?
How is my Reckonable Pay calculated?
What if less than three years’ pay data is available?
What if I have had breaks in service during the last ten years?
What if I have more than one job?

 

What is reckonable pay?

Reckonable pay is the average of the three best consecutive years of pensionable pay in the last 10 years prior to retirement. This average is the figure used to calculate your benefits on retirement from the 2008 section of the NHS Pension Scheme.

 

Which elements of my pay are pensionable?

Generally speaking, income is treated as pensionable if it is regular, likely to continue and relates to normal duties.

Pensionable income currently includes:

  • Basic salary
  • Distinction awards
  • Discretionary points
  • Intensity payments/on call supplements
  • Clinical excellence awards
  • Availability supplements
  • High-cost living area allowance
  • Additional income from clinical or medical director posts (if included within a whole-time contract)
  • for junior doctors, basic pay up to 40 hours per week (i.e. whole-time). If you are working for less than 40 hours per week additional hours worked must be treated as pensionable up to 40 hours (whole-time)
  • Chief officer supplements for doctors in public health medicine
  • Domiciliary visit fees. Pension resulting from this is calculated separately using unscaled (calendar) service as pensionable service.

Income is likely to be non-pensionable if it is irregular, unlikely to continue and relates to work outside normal hours.

Non-pensionable income includes:

  • Private income
  • Banding supplements for junior doctors
  • Sessions/programmed activities beyond whole-time or maximum part-time.

Honorary appointments are non pensionable. However, if you concurrently hold a pensionable employment in the NHS, any distinction award attached to the honorary appointment can be pensionable.

Income from locum work is pensionable, provided you are contracted to work directly for an NHS employer. Income from locum work carried out via agencies is not pensionable.

 

How is my Reckonable Pay calculated?

The Pensions Agency will look at your pensionable pay over the 10 years leading up to your retirement. Reckonable pay is based on the average of the best three consecutive years’ pensionable pay in the last ten years. If you work part-time or beyond whole-time hours, it is your whole-time equivalent pensionable salary that is used.

Before deciding the best three consecutive years’ pay, each year’s pay will first be revalued in line with the Pensions (Increase) Act. The Pensions (Increase) Act currently links increases in pensions to the Consumer Prices Index (CPI).

Reckonable pay cannot predate 1 April 2008.

Further information: on indexing (revaluing of earlier earnings) and examples of calculating reckonable pay (PDF).

 

What if less than three years’ pay data is available?

If less than one year’s pay is available, your reckonable pay will be calculated as per the following example:

Pensionable service 243 days

Notional whole-time equivalent earnings during pensionable service £35,000

Reckonable pay 365/243 x £35,000 = £52,572

If between one and three years’ pay is available, your reckonable pay will be calculated as per the following example:

Pensionable service 806 days

Notional whole-time equivalent earnings during total pensionable service £116,090

Reckonable pay 365/806 x £116,090 = £52,572

 

What if I have had breaks in service during the last ten years?

Breaks in service are ignored. When calculating each year’s pensionable pay, the Pensions Agencies will count back until a full 365 days is achieved.

 

What if I have more than one job?

If you have more than one pensionable NHS job, your pensionable pay is calculated with reference to each employment separately. The number of hours worked in each employment is taken into consideration.

An example of this is as follows:

Employment 1  Employment 2

Programmed activities:   6/10   2/10

Whole-time Pensionable pay:   £79,000   £ 95,000

Total number of PAs per week: 8

Salary employment 1: £ 79,000 X 6/8 = £ 59,250
Salary employment 2: £ 95,000 X 2/8 = £ 23,750

Pensionable pay = £83,000