Section 15 - How to calculate full-time equivalent (FTE) pay under the 2007 Scheme definition

For each year in the Scheme (April – March), a member’s pension is based on actual Pensionable Pay in a Scheme year. The definition of Pensionable Pay from 1 April 2014 includes non-contractual overtime and all additional hours.

Typical Pensionable Pay on which pension contributions are to be paid includes:

• Normal salary or wages;
• Bonuses;
• Overtime (both contractual and non-contractual);
• Maternity, paternity, adoption, and shared parental pay;
• Shift allowance;
• Additional hours payments if the member works part-time; and
• Any other taxable benefit specified in their contract as being pensionable.

Pension contributions are not payable on:

• Any travelling or subsistence allowances;
• Pay in lieu of notice;
• Pay in lieu of loss of holidays;
• Payment as an inducement not to leave before the payment is made;
• Any award of compensation (other than payment representing arrears of pay) made for the purpose of achieving equal pay;
• Pay relating to loss of future Pensionable Payments or benefits;
• Pay paid by your employer if you go on reserve forces service leave;
• The monetary value of a car or pay received in lieu of a car; and
• Any sum which has not had tax liability determined on it.

There are three situations where a member will be entitled to pension benefits that are dependent upon their Pensionable Pay as defined under the Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007.

• The member has been an active member of the Fund before 1 April 2014.
• The member has been an active member of the Fund from the 31 March 2014 but has transferred-in pension benefits from other previous Local Government employment on a final salary basis.
• The member has been an active member of the Fund from the 31 March 2014 but has transferred-in pension benefits from other previous Public Service employment on a final salary basis.

For a member in any of the above categories, Southwark Pension Services will require details of their full-time equivalent (FTE) Pensionable Pay, calculated on the basis as defined in the Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007.

The definition of Pensionable Pay in the 2007 Scheme is:

Meaning of Pensionable Pay 4

1. An employee’s Pensionable Pay is the total of:
   1. All the salary, wages, fees, and other payments paid to them for their own use in respect of his employment; and
   2. Any other payment or benefit specified in his contract of employment as being a pensionable emolument.
2. But an employee’s Pensionable Pay does not include:
   1. Payments for non-contractual overtime;
   2. Any travelling, subsistence or other allowance paid in respect of expenses incurred in relation to the employment;
   3. Any payment in consideration of loss of holidays;
   4. Any payment in lieu of notice to terminate his contract of employment (SI 2009/3150; or
   5. Any payment as an inducement not to terminate his employment before the payment is made.

Therefore, members with pre-2014 pensionable service will need to have an FTE pay calculation done based on the above criteria.

Employee works part-time weekly hours over 52 weeks (for calculation of pay use weeks = 52.143)

1) Convert the hours to a percentage:

Actual weekly hours = 24.00

Whole-time equivalent weekly hours = 37.00

Divide the actual hours by the whole-time equivalent hours:

24.00 ÷ 37.00 x 100 = 64.8649%

This provides the percentage of hours worked per week – this information is needed on the monthly/yearly returns and also on the leavers form.

2) Use the percentage of hours to up-rate part-time Pensionable Pay to the full-time equivalent Pensionable Pay:

Monthly part-time Pensionable Pay divided by the weekly hour’s percentage.

Example:

These are the figures that need to be put in Salary, Hours and Weeks Details part of the monthly/yearly returns and the leavers form.

PLEASE NOTE - you will need to split the pay figures for any changes in hours or pay, so please uprate the part-time pay according to the hours for each period.

Employee works part-time using a week’s factor

1) Convert the hours to a percentage:

Actual weekly hours = 26.50

Full-time equivalent weekly hours = 37.00

Weeks factor = 44.50 out of 52.143

Divide the actual hours by the whole-time equivalent hours for the week then multiply by the week’s factor:

26.50 ÷ 37.00 x 44.50 ÷ 52.143 x 100 = 61.1235%

This provides the percentage of hours worked per week which needs to be stated in the Actual Hours section of the monthly/yearly returns and the leavers form.

2) Use the percentage of hours to up-rate part-time Pensionable Pay to the full-time equivalent Pensionable Pay:

Part-time Pensionable Pay divided by the weekly hour’s percentage.

These are the figures that need to be put in Salary, Hours and Weeks Details on the monthly/yearly returns and the leavers form.

PLEASE NOTE - you will need to split the pay figures for any changes in hours or pay, so please uprate the part-time pay according to the hours for each period.