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. Splitting contracts is one means to make pay which would otherwise be treated as pensionable non-pensionable. Where a contract is split in this way you can opt out of pensioning one whilst remaining in the scheme with another. This may be helpful in relation to pensions taxation or when looking to meet the requirements of partial retirement.    

Pensionable income currently includes:

• basic salary
• distinction awards
• discretionary points
• intensity payments/on call supplements
• national clinical excellence awards
• local clinical excellence awards made prior to April 2018.
• availability supplements
• high-cost living area allowance
• additional income from clinical or medical director posts paid in the form of a responsibility allowance or, for those working less than full time, as additional PAs up to full time.
• for junior doctors, basic pay up to 40 hours per week
• chief officer supplements for doctors in public health medicine
• domiciliary visit fees.

Non-pensionable income includes:

• private income
• new clinical impact awards
• banding supplements for junior doctors
• sessions/programmed activities beyond whole-time or maximum part-time.
• one off bonuses
• Pay expressly stated to be non pensionable.

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. In England NHS Pensions have recently issued guidance to employers to confirm that basic pay from bank roles can be pensioned if paid at higher than substantive NHS rates providing other scheme eligibility conditions are met. Income from locum work carried out via agencies is not pensionable. More guidance on this can be found on the NHS Business Services Authority (NHSBSA) website.

Service that does not count as pensionable

The following service is not pensionable in the NHS pension scheme:

• hours, sessions or programmed activities (PAs) in excess of whole-time employment for your job
• employment via an agency
• honorary post (where unpaid will not accrue pensionable service)
• self employed doctors (other than GPs and dental practitioners)
• disallowed days as a result of industrial action
• periods of sickness without pensionable pay
• periods of unpaid maternity where pension contributions have not been paid.

Qualifying service

Qualifying service refers to the calendar days that you have contributed to the NHS pension scheme irrespective of whether you have worked whole time or part-time.

This type of service is used to determine your eligibility for scheme benefits including:

• the minimum service required to qualify for preserved benefits (two years)
• 20 years as a MHO, enabling doubling of subsequent service to commence in relation to 1995 section accrual only
• the amount of additional service granted (ie, enhancement) when retiring early on the grounds of ill health. 

Please note that there is no upper service limit in the 2015 scheme. Pensionable service cannot continue beyond age 75. At age 75 benefits become immediately payable without a service break being required.

Please see our guidance on sickness absence and maternity for information on disallowed pensionable days.

Reckonable service

Reckonable service in relation to 1995/2008 section accrual

Reckonable/scaled service referred to service which has been reduced to take account of part-time working. For example, if you were to work for 10 years at 50% of whole-time you will have accrued five reckonable/scaled years of service. Pension scheme benefits are calculated with reference to scaled service.

Total pensionable pay (TPP)

Total pensionable pay (TPP) used to calculate 1995 section benefits.

TPP is based on the notional whole time equivalent pensionable earnings over the 365 days up to retirement, or one of the best of the last three years.

TPP is explained in depth in our guide, Your final pensionable pay.

Reckonable pay

Reckonable pay is the average of the best three consecutive years’ pensionable pay out of the final 10 years prior to retirement used to calculate 2008 section benefits.  Reckonable pay will continue to be based on the 10 years leading up to prospective retirement for so long a final salary link is maintained.  A final salary link is lost once you have a single continuous break in pensionable service of 5 or more years.

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.

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 is whole time service?

Whilst 2015 CARE scheme benefits are not based on service and final pay the scheme still restricts accrual based on the whole time pensionable income payable for a job. The maximum number of sessions, programmed activities or hours that can be treated as whole time is determined by your job:

• junior doctors - 40 hours per week
• Specialty Doctors, Associate Specialist or Consultants on the new contracts - 10 programmed activities per week
• Consultants on the old contract - 11 sessions per week
• Clinical assistants - 11 sessions per week. 

You can pay pension contributions on the maximum number of programmed activities, sessions or hours detailed above.

​If you are working for more than the permitted maximum pensionable hours the excess hours are ignored for pension purposes, and you will not pay pension contributions on them.

What if I have more than one job?

You can only be pensionable in the 2015 CARE scheme in up to full time hours in one job (or up to that limit overall in more than one job).

If you have more than one pensionable NHS job, your 1995/2008 scheme 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:

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

This would be your pensionable pay for 1995/ 2008 section benefits only.

For 2015 CARE scheme accrual the actual pensionable pay earned (up to an overall of full time) is added to your pensionable record for the year. So in relation to the example above a total of £66,400 (£47,000 - 6/10 pay plus £19,000 -2/10 pay) in relation to 8 PAS worked will accrue as pensionable income for the year in question producing a pension of £1,229 (1/54th) for that year which will be revalued at the beginning of each prospective scheme year.