The National Health Service Pension Scheme Regulations 1995

Meaning of “pensionable pay" and “final year’s pensionable pay" E+W+S

C1.— [F1 (1) In these Regulations, “pensionable pay” means, subject to the provisions of this regulation—

(a) all salary, wages, fees and other regular payments made to a member in respect of pensionable employment as an officer, but does not include bonuses, payments made to cover expenses or payments for overtime;

(b) pensionable earnings calculated in accordance with paragraph 3, or as the case may be, paragraph 4 of Schedule 2 in the case of a non-GP provider who does not receive any of the payments referred to above in respect of his pensionable employment as an officer by virtue of the application of these Regulations to him as if he were such an officer under regulation R1.]

[F2 (1A) Paragraphs (2) to (4) and (5) to (7) apply in respect of pensionable employment before 1st April 2008.]

(2) Subject to paragraph (3), any amount by which a member’s pensionable pay exceeds the permitted maximum will be ignored when calculating the amount of any contributions or benefits payable under these Regulations.

[F3 (3) In the case of a member who—

(a) joined the scheme before 1st June 1989 and has a break in pensionable employment on or after that date—

(i) any pensionable pay earned preceding the break in that employment in excess of the permitted maximum will not be ignored;

(ii) any pensionable pay earned after the break in that employment in excess of the permitted maximum will be ignored;

(b) joined the scheme before 1st June 1989 and to whom sub-paragraph (a) does not apply, pensionable pay in excess of the permitted maximum will not be ignored.]

[F4 (3A) Where a member who was eligible to be a member before 1st June 1989 joins the scheme on or after that date by virtue of being a person to whom regulation B5 applies, any amount by which that member’s pensionable pay exceeds the permitted maximum will not be ignored when calculating the amount of any contributions or benefits payable under these Regulations except in relation to a period following a break in pensionable employment on or after that date.]

(4) For the purposes of [F5 paragraphs (3) and (3A)], no account shall be taken of a break in pensionable employment if—

(a) the member returns to pensionable employment within 12 months after leaving;

(b) the break is due to the member’s secondment or posting to another employer and, at the time of the secondment or posting, the member has a definite expectation of returning to pensionable employment when the period of secondment or posting ends;

(c) the break is due to the member being engaged in other employment which is approved for this purpose by the Secretary of State;

(d) the break is due to the member’s unpaid absence from work and the member returns to pensionable employment within one month after returning to work; or

(e) the break corresponds to the member’s absence from work wholly or partly because of pregnancy or confinement and the member returns to work after the break in exercise of her right under Section 39(1) of the Employment Protection (Consolidation) Act 1978 M1 and returns to pensionable employment no later than one month after returning to work;

[F6 (f) the break is due to the member opting out of the scheme as the result of a contravention which is actionable under section 62 of the Financial Services Act 1986 [F7 or section 150 of the Financial Services and Markets Act 2000].]

[F8 (4A) Paragraphs (4B) to (7) apply in respect of pensionable employment on, or after, 1st April 2008.

(4B) Subject to paragraph (4C), pensionable pay in excess of the permitted maximum will not be ignored.

(4C) Pensionable pay in excess of the permitted maximum will be ignored in respect of additional service being bought under regulation Q1 and an unreduced lump sum being brought under regulation Q2 if—

(a) the member elected to make such a purchase under regulation Q6(3) from a birthday falling before 1st April 2008; and

(b) the member’s pensionable pay was restricted under paragraph (2) of this regulation before that date; or

(c) the member’s pensionable pay would have been restricted under that paragraph if it had exceeded the permitted maximum.]

(5) This regulation applies to a member in respect of whom a transfer payment has been accepted from a health service scheme in the same way as if the period of employment that qualified the member for benefits under the health service scheme had been pensionable employment.

(6) [F9 Subject to paragraph (6A), in these] Regulations, “final year’s pensionable pay" means pensionable pay in respect of the member’s last year of pensionable employment, ending on the date the member ceases to be in such employment, or dies, whichever occurs first, except—

(a) if pensionable pay was greater in either or both of the 2 consecutive years immediately preceding the last year, “final year’s pensionable pay" means pensionable pay in respect of the year immediately preceding the last year or, if greater, pensionable pay in respect of the first of those 2 consecutive years; and

(b) if the member was in pensionable employment for less than 12 months, “final year’s pensionable pay" means—

[F10 (6A) If the pensionable pay of a member credited with a period of pensionable service under regulation N2 (transfers made under the Public Sector Transfer Arrangements) or regulation N4 (special terms for transfers in (bulk transfers etc)) has exceeded the permitted maximum and either—

(a) paragraph 20 of Schedule 6 to the Finance Act 1989 applied to the member without the modification made by regulation 5 of the Retirement Benefits Schemes (Continuation of Rights of Members of Approved Schemes) Regulations 1990 in respect of benefits derived from all or part of that service under another scheme; or

(b) any equivalent scheme provision applied to the member in respect of all or part of that service when that person was a member of the scheme from which the transfer was accepted,

that excess shall be ignored for the purposes of calculating the final year’s pensionable pay under paragraph (6) in respect of the corresponding period of pensionable service credited under regulation N2 or N4.]

[F11 (7) In this regulation, “permitted maximum” means—

(a) in relation to any tax year before the tax year 2006-07, the figure specified for that tax year in an order made under section 590C of the Income and Corporation Taxes Act 1988; or

(b) subject to paragraphs (8) and (9), the figure for any later year is £108,600.

(8) If the retail prices index for the month of September preceding the tax year 2007-08 or any later tax year is higher than it was for the previous September, the figure for that year shall be an amount arrived at by—

(a) increasing the figure for the previous tax year by the same percentage as the percentage increase in the retail prices index; and

(b) if the result is not a multiple of £600, rounding it up to the nearest amount which is such a multiple.

(9) If the retail prices index for the month of September preceding the tax year 2007-08 or the month of September preceding any later tax year is not higher than it was for the previous September, the figure for that year shall be the same as for the previous tax year.]

[F12 (10) Where, having regard to the matters referred to in paragraph (11), the Secretary of Secretary of State considers that the amount which would, but for the Secretary of State’s determination under this paragraph, constitute the member’s final year’s pensionable pay is inordinate, determine—

(a) what the amount of that pensionable pay is to be, and

(b) the date from which any change in the amount of that pay as a result of that determination is to take effect.

(11) Those matters are—

(a) any variations in the level of the member’s pensionable pay during a period not exceeding ten years and ending with the earlier of the date the member ceases to be in pensionable employment or the date the member dies;

(b) the general level of pensionable pay pertaining in NHS employment for members of the same or an equivalent grade or post during the period under consideration for the purposes of paragraph (a);

(c) promotion and re-grading prospects in NHS employment for members of the same or an equivalent grade or post during the period under consideration for the purposes of paragraph (a);

(d) any other matters the Secretary of State considers relevant.

(12) Where the Secretary of State determines the amount of a member’s final year’s pensionable pay pursuant to paragraph (10)—

(a) the difference between the amount which would, but for that determination, be the member’s final year’s pensionable pay and the amount so determined shall be ignored for the purposes of this regulation (“the ignored amount”);

(b) any contributions referable to the ignored amount and paid by the member pursuant to regulation D1 or Q6, paragraph 10 or 23 of Schedule 2 or Schedule 2B, must, net of any tax payable, be refunded to that member;

(c) any contributions referable to the ignored amount and paid by the employing authority pursuant to regulation D2 or paragraph 10 or 23 of Schedule 2, or Schedule 2B, must be refunded to that employing authority;

(d) the amount so determined is not to be regarded as an “excessive pay increase” for the purposes of regulation D3.]

Textual Amendments

F1 Reg. C1(1) substituted (with effect from 1.4.2004) by The National Health Service (Pension Scheme and Injury Benefits) Amendment Regulations 2005 (S.I. 2005/661), regs. 1(1), 5

F2 Reg. C1(1A) inserted (1.4.2008) by The National Health Service Pension Scheme (Amendment) Regulations 2008 (S.I. 2008/654), regs. 1(2), 5(2)

F3 Reg. C1(3) substituted (with effect from 1.4.2003) by The National Health Service Pension Scheme (Amendment) Regulations 2003 (S.I. 2003/2322), regs. 1(1)(2)(b), 2(2)

F4 Reg. C1(3A) inserted (12.2.1997) by The National Health Service Pension Scheme and Provision of Information and Administrative Expenses etc. (Amendment) Regulations 1997 (S.I. 1997/80), regs. 1, 4(1)

F5 Words in reg. C1(4) substituted (12.2.1997) by The National Health Service Pension Scheme and Provision of Information and Administrative Expenses etc. (Amendment) Regulations 1997 (S.I. 1997/80), regs. 1, 4(2)(a)

F6 Reg. C1(4)(f) added (12.2.1997) by The National Health Service Pension Scheme and Provision of Information and Administrative Expenses etc. (Amendment) Regulations 1997 (S.I. 1997/80), regs. 1, 4(2)(b)

F7 Words in reg. C1(4)(f) inserted (1.12.2001) by The Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001 (S.I. 2001/3649), arts. 1, 483(3)

F8 Regs. C1(4A)-(4C) inserted (1.4.2008) by The National Health Service Pension Scheme (Amendment) Regulations 2008 (S.I. 2008/654), regs. 1(2), 5(3)

F9 Words in reg. C1(6) substituted (1.4.2008) by The National Health Service Pension Scheme (Amendment) Regulations 2008 (S.I. 2008/654), regs. 1(2), 5(4)

F10 Reg. C1(6A) inserted (1.4.2008) by The National Health Service Pension Scheme (Amendment) Regulations 2008 (S.I. 2008/654), regs. 1(2), 5(5)

F11 Regs. C1(7)-(9) substituted for reg. C1(7) (1.4.2008) by The National Health Service Pension Scheme (Amendment) Regulations 2008 (S.I. 2008/654), regs. 1(2), 5(6)

F12 Regs. C1(10)-(12) inserted (1.4.2014) by The National Health Service Pension Scheme (Amendment) Regulations 2014 (S.I. 2014/570), regs. 1(2), 5 (with reg. 49)

Marginal Citations

M1 1978 c.44. Section 39 was inserted by section 23 of, and Schedule 2 to, the Trade Union Reform and Employment Rights Act 1993 c.19.