Example of Reduced Pay Sickness
This section includes examples of when and how assumed pay is used to calculate main scheme contributions for an employee on an assumed pay absence.
Robert goes on sick leave and his pay is reduced from 01-August to 15-November.
| Pay | May | June | July |
|---|---|---|---|
| Salary | £2,500 | £2,600 | £2,600 |
| Bonus | £250 | £260 | £260 |
| Overtime | £775 | £450 | £399 |
| Expenses (not pensionable) | £210 | £174 | £305 |
| Total Pensionable Earnings for Period* | £3,525 | £3,310 | £3,259 |
* Total Pensionable Earnings exclude the non-pensionable expenses.
Pensionable pay comprises the total pensionable earnings for 3 full periods prior to the reduced pay so: £3,525 + £3,310 + £3,259 = £10,094
Annual assumed pensionable pay (APP) is £10,094 / 3 x 12 = £40,376
Annual APP is applied to the entire reduced pay absence. Jonas is on reduced pay absence from 01/08/2017 – 15/11/2017
Monthly APP is £40,376 / 12 = £3364.67
In November, the employer contributions are calculated based on:
15 days prorated APP £3364.67/30*15 = £1682.34 plus 15 days prorated Permanent Pensionable Pay for this month (£2,600 + £260)/30*15= £1430.00, in total £3112.34.
| Sick Absence Rate | Dates | Employee Contribution Base | Employer Contribution Base |
|---|---|---|---|
| Paid at reduced pay | 1 – 31 August | Actual pensionable pay £2860/2 = £1430 Half Pay |
£3364.67 |
| Paid at reduced pay | 1 – 30 September |
Actual pensionable pay £2860/2 = £1430 Half Pay |
£3364.67 |
| Paid at reduced pay | 1 – 31 October |
Actual pensionable pay £2860/2 = £1430 Half Pay |
£3364.67 |
|
Paid at reduced pay Paid at full pay |
1 – 15 November 16 – 30 November |
Actual pensionable pay £2860/2 = £1430 Half Pay / 30 *15 = £717 Plus Actual pensionable pay £2860 / 30 *15 = £1430 In total £2147 |
15 days prorated APP £3364.67/30*15 = £1682.34 Plus 15 days prorated Permanent Pensionable Pay for this month (£2,600 + £260)/30*15= £1430.00 In total £3112.34 |