Sick leave and your pension

We guide you through how sick leave affects your pension pot, covering deemed pay, stepping back, disallowed days and additional pension purchase.

Location: UK
Audience: Consultants GPs Junior doctors
Last reviewed: 7 September 2020
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Paid sick leave

A period of paid sick leave is treated as pensionable service.

If you are a secondary care doctor who is contributing to the final salary section of either the 1995 or the 2008 sections, while you receive sick pay your pension will continue to accrue. This is based on your pay and commitment level prior to your period of sick leave. This will apply even during a period of reduced pay.

You will be credited with scaled service proportionate to your normal whole-time or part-time hours, and you will be credited with receiving your usual rate of pensionable pay. This is known as deemed pay.

If you are a GP partner or salaried GP you will be entitled to deemed GP pay. If you suffer a genuine loss of pensionable income as a result of illness you may qualify for deemed sick pensionable pay to be credited to your pension records. You should contact your local area team or pensions agency for advice. Evidence may be required to demonstrate a genuine loss in pensionable income.

If you are a locum GP you will not be covered by the deemed pay arrangements.


What deemed pay is

If you are a secondary care doctor who is forced to retire following a period of ill health your pensionable pay will be calculated on your whole-time equivalent irrespective of the fact that you might have been in receipt of reduced pay.

If you are a GP and your income reduces as a result of a period of sick leave, your local area team will advise the pension agency that your earnings should be deemed to be those which applied during the year before your earnings reduced. This means that at retirement your benefits are calculated assuming that no earnings reduction had occurred.


Unpaid sick leave

If you are a secondary care doctor who is contributing to the final salary section of the 1995 or the 2008 section, a period of unpaid sickness absence is treated as non-pensionable. Your employer will notify the pensions agency that these are disallowed days.

You will be recorded as having no NHS pensionable earnings for this period. This period will be ignored from the calculation of pensionable pay for the purposes of determining either total pensionable pay (1995 section), or reckonable pay (2008 section), and stepping back will apply.

Stepping back allows the scheme to ignore periods of unpaid absence when calculating pensionable pay for secondary care doctors. Pensionable pay must be calculated over 365 paid days.

If you are a GP you will not accrue any service or be credited with any pensionable earnings during any period of unpaid sickness absence.
Periods of unpaid sickness absence are recorded as disallowed days as you have received no pay and no pension contributions are to be collected.

Other considerations:

  • if you are in receipt of reduced or nil pay due to illness you will continue to be covered for death in service benefits
  • if you have reduced pay, when you are in receipt of reduced pay your contributions are based on your reduced rate of pay
  • when you are in receipt of reduced pay your employer will continue to pay contributions based on your unreduced pay
  • when you are in receipt of nil pay the employer contributions stop
  • if you have MHO status, periods of no pay sick leave will be excluded from your pensionable service which may affect the accrual of your doubled service
  • you do not need to be on sick leave to submit an application for ill health retirement.


Added years and additional pension purchase

When you are in receipt of reduced pay you will continue to pay added years contributions and additional pension purchase based on your unreduced pay.

When you are in receipt of nil pay then contributions towards added years and additional pension purchase stop. For added years, the pensions agencies will be notified that these are disallowed days.

If your unpaid sickness absence exceeds 12 months, you will be able to resume paying towards your added years or additional pension contract on your return to work as long as your NHS contractual service is not broken. The no pay period will be classed as disallowed days and the total additional service credit will take into account this period of missing contributions.