SECTION PENSION CONTRIBUTIONS... 1

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1 Contents SECTION INTRODUCTION...1 PENSION CONTRIBUTIONS WHAT PENSION CONTRIBUTIONS ARE...1 Rates of employee Scheme contributions...1 Rate of employer Scheme contributions...2 Tax relief on employee Scheme contributions...2 Limits on employee contributions PAYMENT TO THE AGENCY OF EMPLOYEE AND EMPLOYER CONTRIBUTIONS...3 Employer responsibilities METHOD OF PAYMENT GP PRACTICES...5 Setting up the direct debit mandate...5 Making payment DIRECTION EMPLOYERS...6 Paymaster Transfer System (RFT1)...6 Direct Debit...7 Setting up the direct debit mandate...7 Making payment...7 BACS NHS EMPLOYERS, HEALTH AUTHORITIES, NHS TRUSTS ETC...8 Paymaster Transfer System (RFT1)...9 BACS...9 Cheque Stationery PENSIONABLE PAY WHAT PENSIONABLE PAY IS EARNINGS CAP OVERTIME BONUS AND PERFORMANCE RELATED PAYMENTS... 15

2 3.12 DOMICILIARY CONSULTATION FEES (also known as DV Fees) DV Fees are pensionable pay HONORARY APPOINTMENTS ENHANCED PAYMENTS Members working part-time Recording part-time hours Members working whole-time ON-CALL AND STAND-BY DUTY Payments for on-call and standby duties Whole-time employees Part-time employees Contributions for on-call and standby duties ANNUAL LEAVE Paid leave Employments within pensionable terminal leave PAYMENTS MADE OR WITHHELD IN LIEU OF NOTICE Payments made in lieu of notice Payment of wages withheld CHANGE EVENTS AGE LIMITS Earliest and latest ages that contributions can be deducted MEMBERSHIP LIMITS Maximum amount of membership allowed Identifying maximum membership Inform the member CONTRIBUTIONS Under-deducted contributions Eligibility for membership doubtful Over-deducted contributions RETROSPECTIVE PAY INCREASES Notifying the REDUCTION OF PENSIONABLE PAY... 26

3 3.22 STATUTORY SICK PAY [SSP] Pensionable pay status SSP higher than normal rate of pay Deemed pay - What it is Calculating contributions on deemed pay Calculating deeming for bonus and special duty payments Exhaustion of paid sick leave Contributions on illness, injury or sick leave REDUCED PAY ON LEAVE OF ABSENCE OTHER THAN SICKNESS OR INJURY MATERNITY PAY AND LEAVE Member does not intend to return to work How to calculate the contributions payable Member intends to return to work Member changes her mind Statutory Maternity Pay (SMP) Refunds of contributions ABSENCE WITHOUT LEAVE Pay on absence without leave Contributions on absence without leave Retrospective agreement to the absence Recording the absence LEAVE FOR TRAINING WITH THE RESERVE AND CADET FORCES Pay on leave for training with the Reserve and Cadet Forces Contributions on leave for training with the Reserve and Cadet Forces Further leave for training with the Reserve and Cadet Forces Short periods of training for the Reserve and Cadet Forces Reservists who are called up for service UNTAKEN ANNUAL LEAVE Starting another job before expiry of paid leave Whole-time employments take precedence If the second employment is MHO Overlapping contributions REDUCTION IN PENSIONABLE EARNINGS PROTECTION OF PAY Contributions... 40

4 3.30 DOMICILIARY CONSULTATION FEES (DV Fees) Deeming DV Fees TOTAL PENSIONABLE PAY (TPP) WHAT TOTAL PENSIONABLE PAY IS NOTIFYING THE AGENCY Missing information CALCULATING A TPP Calculating a TPP for whole-timers (WT TPP) Reduction of pensionable pay Stepping back the TPP period Absence without leave Untaken annual leave at the end of employment Paid notice Bonus and performance related payments Protection of pay Domiciliary consultation fees (DV fees) earned in the TPP period Calculating the NWT TPP where enhanced hours payments are included in the pensionable pay Part-time Community Health Officers Calculating a notional whole-time TPP [NWT TPP] for part-timers Calculating a TPP where the member was both WT and PT in the TPP period Still got problems? UNUSUAL SITUATIONS WHEN CONTRIBUTIONS MUST EITHER CEASE OR CONTINUE EMPLOYER SCHEME CONTRIBUTIONS MHOs WHO ACHIEVE 45 YEARS BY THE FAST ACCRUAL METHOD (DOUBLING) PENSIONABLE OVERTIME Contractual overtime Compulsory casual overtime UNTAKEN ANNUAL LEAVE Annual leave at the end of employment - Optants Annual leave changes for ASC and building trade staff... 51

5 SECTION INTRODUCTION This part of the Guide is in 2 sections. The first section deals with contributions and pay for non-practitioner members and the second section deals with practitioner members. Please bear in mind that many practitioners also have nonpractitioner membership which will require you to read both sections. To use this part of the Guide for practitioners you may have to read Section 1 and Section 2. PENSION CONTRIBUTIONS 3.2 WHAT PENSION CONTRIBUTIONS ARE Pension contributions are the amounts collected by the Scheme from both the employee and employer to finance the benefits payable to members. They are deducted from pensionable pay only. Pension contributions are collected by the Scheme from both the employee and the employer. Rates of employee Scheme contributions Employee contributions are currently: Employees pay 5 or 6%. 5% of pensionable pay for manual workers; 6% of pensionable pay for all others They will be assessed and collected before any deductions for tax. This means that contributions to All contributions are tax free and members pay reduced NI contributions. [Section 1] 3-1

6 the Scheme are tax free and with reduced rate of National Insurance also payable, make the real cost of the Scheme around 3% or 4% for most members for a return of almost 20% of pay, when the employer and Government contributions are taken into account. Rate of employer Scheme contributions Employer contributions are reassessed from time to time by the Government Actuary and are currently 4% of pensionable pay. They will rise to 5% from and 7% from Employers pay 4%, rising to 7% by Where a member contributes on reduced pensionable pay, for instance, during sick leave, the employers FULL contributions will be calculated and paid as if there was no reduction or suspension. To read more about employee contributions during sick absence, or absence without leave, or maternity leave, (go to paras , 3.23 and 3.24). Where members are absent, employer contributions are always calculated at the full rate. Tax relief on employee Scheme contributions Tax relief will be given on contributions to the limit of 15% of pensionable pay, in any one fiscal year. Payments of arrears do not have to be made on a regular basis and any payment (including lump sums and instalments) made in any fiscal year will be given relief, provided they do not bring the aggregate contributions to more than 15% of the pensionable pay for that year. Providing a member has pensionable pay taxable under Schedule E, they Employee contributions are tax free up to the IR limit of 15% in any tax year. [Section 1] 3-2

7 can be given relief on contributions up to 15% of the pensionable pay in any one year. Limits on employee contributions Because they attract tax relief as explained above, the Inland Revenue places restrictions on the amount of pension scheme contributions that can be made. Members can t pay more than 15% of pensionable pay into the Scheme per year The maximum amount of all employee contributions, including their standard 5% or 6%, any Additional Voluntary Contributions (AVCs) for additional purchases such as additional membership or pension top ups and any arrears, is 15% of pensionable pay Employers are reminded to record employees standard 5% or 6% contributions on form SD55 separately in box 23 from any AVCs in box 29. To read more about completing form SD55, (go to Part 11, Forms & Records.) Record contributions on form SD55. Standard contributions box 23. AVCs box PAYMENT TO THE AGENCY OF EMPLOYEE AND EMPLOYER CONTRIBUTIONS Employer responsibilities Employers are responsible for the collection and payment to the, of all NHS Pension Scheme contributions. The Pensions Act 1995 requires contributions to be paid to the Scheme within 19 days of the end of the month in which they were deducted from Remember! Employers are responsible for collection and payment to the of all contributions. Watch out for time limits. [Section 1] 3-3

8 salary. These time scales ensure that monies deducted for pensions are not appropriated to any other purpose and it is very important that they are strictly adhered to. Contributions must be paid within 19 days of the end of the month Employers are advised that the Occupational Pensions Regulatory Authority (OPRA) are likely to seek information from Scheme managers (the ) and Actuaries about any breaches which they regard as a criminal offence. They have significant powers to fine individuals and corporate bodies of sums between 5,000 and 50,000 for persistent breaches. 3.4 METHOD OF PAYMENT The method of payment will be determined by the type of employer. There are 3 main groups: There are different methods of payment. GP Practices; Direction Employers; All other NHS Employers, Health Authorities, NHS Trusts etc The following paragraphs describe the various methods and explain employer action. [Section 1] 3-4

9 3.5 GP PRACTICES Will pay their contributions by direct debit. GP practices pay by direct debit. Setting up the direct debit mandate Practices must set up a direct debit by completing a direct debit mandate form. If you have already registered your practice with the, you will normally receive one automatically. If you have not received one or need another, (go to para 3.7.8). New Practices, don t forget to set up a direct debit mandate. Making payment Once the direct debit is set up, payment must be made by Direct Debit to the s contribution collection agents: Capita Hartshead Ltd, using form GP1. Payment by direct debit is to Capita Hartshead Ltd using form GP Each month a fully completed form GP1, showing the total pension contributions to be paid for all employees, must be sent or faxed in time to arrive at Capita Hartshead Ltd, no later than the 17th of the month, for credit to the practice account at the by the 19th of the month. Fax form GP1 no later than 17 th of the month. Address for GP1: Ronald Houghton Capita Hartshead Ltd PO Box 1191 SHEFFIELD, S11 8SL. Or Fax to: [Section 1] 3-5

10 3.6 DIRECTION EMPLOYERS May make payment either by: Paymaster Transfer System (form RFT1); or Direct Debit; or Direction Employers can pay by: Paymaster Transfer Direct Debit BACS. BACS. Paymaster Transfer System (RFT1) Payment should be made using form RFT1. Full instructions on how to complete the form RFT1 are given on it s reverse Form RFT1 combines the standard Paymaster RFT1 (at Part A) and the remittance advice (at Part B). Send the completed form to Paymaster, showing Paymaster Account 6057, on or before the 19th of the month, to ensure the employer account at the is credited as quickly and accurately as possible. Paymaster will forward the tear-off remittance advice (Part B) to the after they have arranged payment. To pay by Paymaster transfer use form RFT1. Address for RFT1: Banking Services Paymaster Sutherland House Russell Way CRAWLEY West Sussex RH10 1WF Or Fax to: or [Section 1] 3-6

11 Direct Debit Setting up the direct debit mandate Direction employers must first set up a direct debit by completing a direct debit mandate form. When a new direction employer is registered with the they will normally receive one automatically. If not or they need another, (go to para 3.7.8). To pay by direct debit set up a direct debit mandate first. Making payment Once the direct debit is set up, payment must be made by direct debit to the s contribution collection agents, Capita Hartshead Ltd using form DIR6. Use form DIR6 to make payment by direct debit Each month a fully completed form DIR6 should be sent or faxed to arrive at Capita Hartshead Ltd no later than the 17th of the month, for credit to the employer s account at the by the 19th of the month. Fax no later than 17 th of the month. Address for DIR6: Ronald Houghton Capita Hartshead Ltd PO Box 1191 SHEFFIELD SS11 8SL or Fax to: [Section 1] 3-7

12 BACS How employers instruct BACS will depend on the banking system they use. Their bank will provide details on how to submit BACS instructions. Make sure BACS instructions arrive in time to credit the s account no later than 19 th of the month Employers should ensure that their instructions reach BACS in time for their payment to be credited to the no later than the 19th of the month. BACS payments should be made payable to: Account Number , NHSPA (Benefits) Account 6057, Sort Code To ensure that the employer account at the is correctly credited a fully completed Part B of form RFT1 should also be sent to the at the same time as making the BACS payment. Send form RFT1 to the when you send the BACS instruction. Address for Part B of RFT1: Finance Department (LP11) Hesketh House 200/220 Broadway FLEETWOOD Lancs FY7 8LG Or Fax to: NHS EMPLOYERS, HEALTH AUTHORITIES, NHS TRUSTS ETC Main Scheme employers other than GP practices or Direction employers may make payment either by: [Section 1] 3-8

13 Paymaster Transfer System (RFT1); or BACS; or Cheque. HA, Trusts, etc. can pay by: Paymaster Transfer BACS Cheque Paymaster Transfer System (RFT1) Payment should be made using form RFT1. Full instructions on how to complete the form are given on it s reverse. Form RFT1 combines the standard Paymaster RFT1 (at Part A) and the remittance advice (at Part B). Send the completed form to Paymaster, showing Paymaster Account 6057, on or before the 19th of the month to ensure the employer account at the is credited as quickly and accurately as possible. Paymaster will forward the tear-off remittance advice (Part B) to the after they have arranged payment. Pay by Paymaster Transfer using form RFT1. Send form RFT1 on or before 19 th of the month. Address for RFT1: Banking Services Paymaster Sutherland House Russell Way CRAWLEY West Sussex RH10 1WF Or Fax to: or BACS How employers instruct BACS will depend on the banking system they use. Their bank will provide details on how to submit BACS instructions. [Section 1] 3-9

14 3.7.4 Employers should ensure that their instructions reach BACS in time for their payment to be credited to the no later than the 19 th of the month. BACS payments should be made payable to: Account Number , NHSPA (Benefits) Account 6057 Sort Code BACS instructions should arrive in time for payment to be credited to the s account no later than 19 th of the month To ensure that the employer account at the is correctly credited a fully completed Part B of form RFT1 should also be sent to the at the same time as making the BACS payment. Send form RFT1 to the. Address for Part B of RFT1: Finance Department (LP11) Hesketh House 200/220 Broadway FLEETWOOD Lancs FY7 8LG Or Fax to: Cheque Send a fully completed Part B of form RFT1 together with your cheque to arrive at the no later than the 19th of the month. Make cheques payable to NHSPA (Benefits) Account and send to: For payment by cheque, send form RFT1 with the cheque to the to arrive by 19 th of the month. Finance Department (LP11), Hesketh House 200/220 Broadway Fleetwood, Lancs, FY7 8LG. [Section 1] 3-10

15 Stationery Copies of forms RFT1, GP 1 and DIR 6 are at Part 11, Forms & Records. Stocks of GP1 and DIR6 are available from Stationery Store at: Forms GP1 and DIR6 are held at Stationery Store. Distribution Centre PO Box 777 London SE1 6XH Tel: Fax: You may telephone or fax your order but are encouraged to telephone whenever possible. Form RFT1 can be copied from Part 11. Form RFT1 can be copied from this Guide. Direct debit mandate forms are available from the s Data Base Administrator, Ian Nicholls (LP30) Tel: Please note that banks will only accept original forms, not copies. Direct debit mandates are available from the Data Base Administrator. PENSIONABLE PAY 3.8 WHAT PENSIONABLE PAY IS Pensionable pay is formally defined as all salary, wages, fees and other regular payments made to a member in respect of pensionable employment as an officer and is the amount on which contributions will be collected. Not all pay is pensionable. Contributions will not be collected on those aspects Pensionable pay is pay on which contributions are collected. [Section 1] 3-11

16 which are not pensionable. Where the pay is pensionable, contributions must be collected and the membership will reckon for benefits. Generally speaking, it does not include bonuses, payments made to cover expenses, or payments for overtime. These are explained in more detail later in this section. Remember not all pay is pensionable Members receive a variety of payments. Some are pensionable. Others are not. Listed in the following paragraphs are details of a selection of these payments. If the payment you want is not shown here, and you are not sure if it is pensionable, please contact your Client Centre for advice. If you are not sure if the payment is pensionable, ask the. 3.9 EARNINGS CAP From all new entrants to Occupational Pension Schemes have been limited on the amount of pensionable pay on which contributions can be collected. This is commonly referred to as the earnings cap, is subject to annual increases in line with inflation and means that any amount above this cannot be taken into account for either the collection of contributions or calculation of a TPP. The table at Appendix 1 sets out the limits to date. Watch out for the Earnings Cap for new entrants after For this purpose a new entrant is a member : with earlier preserved benefits who rejoins the NHS Scheme after ; or [Section 1] 3-12

17 who transfers into the NHS after from any scheme other than a Health Service Pension Scheme; or who returns after a disqualifying break; or who opts out of the Scheme (by signing a leaflet SD502), takes a refund of contributions then rejoins the Scheme; or who is absent from the Scheme for 12 months or more for the purpose of a career break; or who, on or after , joins the Universities Superannuation Scheme [USS]; and will be treated as a new member on their subsequent return to the NHS Scheme. BUT ex NHS members who transferred to USS before need not be treated as new members if they returned to the NHS before New members are those: With earlier preserved benefits TVs In after Returning after a disqualifying break Rejoins after opting out and taking a ROC Who have been absent for a year or more on a career break Joins USS on or after then returns to the NHS. Note The earnings cap is entirely separate from the earnings limits imposed on Dental Practitioners. (To read more about these go to para 3.2.) Be careful not to confuse the Earnings Cap with the earnings limits for dentists. [Section 1] 3-13

18 3.10 OVERTIME Overtime is not pensionable, if over standard whole-time hours Overtime is defined as any hours worked in excess of the agreed standard whole-time hours for the grade. It is NOT extra hours worked by part-timers which still fall underneath the standard whole-time hours for the grade. So long as they remain within the standard whole-time hours for the grade, part-timers are pensionable on extra hours they work. Example 1 A WT employee whose whole-time standard hours are 37 hours a week, works 40 hours, ie. 3 extra hours. Overtime is any hours worked in excess of the recognised standard whole-time hours for the grade. The extra hours are not pensionable because they are above the standard WT hours for the grade. Example 2 A PT employee whose contractual PT hours are 20 hours a week and whose standard WT hours are 37, works 23 hours, ie. 3 extra hours. Extra hours up to wholetime worked by parttimers is pensionable The extra hours are pensionable because altogether the hours worked are still under the standard WT for the grade. [Section 1] 3-14

19 3.11 BONUS AND PERFORMANCE RELATED PAYMENTS Because the does not have access to the payroll and all details of specific payments, it is the employer s responsibility, in the first instance, to determine which payments are pensionable and which are not. In order for employers to make this decision the following guidelines should be followed: Employers will decide which payments are pensionable. Different employers often call the same or similar payments different names - what one may call a bonus another may refer to as performance related pay. We therefore cannot pay too much attention to the name tag but more to the nature of the payment; Some bonus or PRP payments are pensionable. It does not necessarily matter whether the payment is consolidated; They don t have to be consolidated. The main considerations are that it must be a regular and continuing feature of the job, and the member must have a reasonable expectation of at least being able to aim to earn the payment on a regular basis (yearly is considered regular) through performance of their regular, day to day duties; They must be a regular feature of the job. Payments which may fluctuate, are once-only payments or relate to hours above the standard whole-time for the post are not pensionable; Fluctuating or one-off payments are not pensionable. A performance related payment which is not part of an individual s pay package and is paid as a [Section 1] 3-15

20 one-off lump sum or discretionary bonus or incentive payment for the completion of a particular job is not pensionable. An example of what would not be pensionable is a one-off reward payment to say a finance manager who, as a one-off special project succeeded in saving the employer a lot of money as something special and in addition to their normal day to day duties; A corporate performance payment may be pensionable provided it satisfies the normal rules relating to performance related pay pensionability and provided it is also linked to an individual s performance as well as that of a Trust. A payment that attaches solely to the performance of a Trust is not pensionable; The national arrangements relating to performance for senior/general managers provide for performance related pay, which rewards past achievement, to be paid as a percentage addition to future salary on a monthly basis. It is therefore only paid whilst there is a salary in payment and is pensionable; The lump sum which employers have discretion to pay to compensate those who retired part way through a year and thus did not receive a full year s performance related pay is not pensionable; Lastly, it should always be borne in mind that where there are a group of people involved, whatever decision is made for one must apply to Corporate performance payments may be pensionable. But a payment that attaches solely to the performance of a Trust is not pensionable. PRP for Senior Managers can be pensionable. Lump sums paid to those retiring part way through a year to compensate for loss of a full year s payment are not pensionable. [Section 1] 3-16

21 all. For instance, a member nearing retirement may find it beneficial to have such payments regarded as pensionable because it will increase their TPP, but other members not so near retirement may not find it beneficial because the payments would not be taken into account for the calculation of a TPP. Where a group of people are involved, apply the same decision to all DOMICILIARY CONSULTATION FEES (ALSO KNOWN AS DV FEES) DV Fees are pensionable pay Domiciliary consultation fees, sometimes referred to as Domiciliary Visit or DV Fees, are classed as pensionable pay and contributions should be collected on them in the normal way. DVs are pensionable HONORARY APPOINTMENTS Generally speaking, an honorary appointment is not pensionable. However, where the person holds, at the same time, an employment which is pensionable, any distinction award attached to the honorary appointment will be included in the member's pensionable pay. Most honorary appointments are not pensionable, but watch out for exceptions Each case of honoraria paid to clinical tutors must be considered separately. HM(64)69 gives the background to these appointments, which will normally be held by consultants already in contract with a Regional Health Authority. Consider all honoraria paid to Clinical Tutors separately. [Section 1] 3-17

22 Some honoraria may be paid from funds supplied by the Nuffield Provincial Hospital Trust or King Edward's Hospital Fund for London In 3 cases, honoraria have been classified as pensionable where the authority: made the appointment for a specified period; settled the pay and terms of the appointment; and laid down the programme of tutor activities; Cases of doubt should be referred to your Client Centre ENHANCED PAYMENTS Members working part-time Some members will receive enhanced rates for some of their part-time hours; eg. special duty payments for nurses working night shifts. These enhancements are classed as pensionable pay, therefore contributions should be collected in the normal way. Enhanced payments to part-timers can be pensionable. Recording part-time hours The basic working hours should be recorded in the normal way at box 31 of forms SD55 or SD55J. Remember to record the hours worked by part-timers on form SD55 or SD55J at box 31. [Section 1] 3-18

23 Example Contracted part-time hours = 23 per week. Of the 23 hours, 8 are worked on a night shift and attract an enhanced hourly rate. Include the 23 hours in the annual part-time hours to be entered in box 31 of form SD55. Collect contributions on both the basic hourly rate for the 23 hours and the extra enhanced hourly rate paid for the 8 hours of the night shift. Members working whole-time Pension records for members working whole-time are not affected by enhanced hourly payments. Pension records for whole-timers are not affected by enhanced payments ON-CALL AND STAND-BY DUTY Payments for on-call and standby duties Where a member is expected to be available oncall or on stand-by as a regular feature of employment or where there is a specific rota commitment, any payment made on that account is pensionable. This includes locally agreed payments for periods of emergency cover. On call and standby duty payments are usually pensionable. [Section 1] 3-19

24 Whole-time employees Any payments made for work actually done in the course of such duties however, is in the nature of overtime and as such is not pensionable. Watch out for payments for work actually done which is not pensionable. Part-time employees Where the work actually done is carried out as extra hours, but still within the whole-time standard for the grade, the payment for the work actually done will be pensionable up to the equivalent of the whole-time standard for the grade. To read more about extra hours worked by part-timers (go to para 3.10). Contributions for on-call and standby duties Because the payments made as above are pensionable, contributions should be collected in the normal way ANNUAL LEAVE Paid leave Annual leave taken in the normal course of an employment is usually paid leave which will be pensionable. Contributions will be collected in the normal way. Normal annual leave is pensionable. [Section 1] 3-20

25 Employments within pensionable terminal leave A member cannot be pensionable in 2 jobs at the same time that come to more than whole-time. A period of employment which is wholly contained within a period of terminal leave is not pensionable and contributions must not be deducted. For instance, where a member is leaving and moving to another job, they may actually finish on say Friday, start their new job the following Monday but have 3 weeks untaken annual leave owing from the first employer, for which, of course, they will be paid. That period is pensionable with the first employer. Consequently it is not pensionable with the second employer and contributions for the new job will start in 3 weeks time. Watch out for employment during terminal annual leave that is not pensionable PAYMENTS MADE OR WITHHELD IN LIEU OF NOTICE Payments made in lieu of notice Payments by an employer in lieu of notice are NOT pensionable, but are in effect compensation to an employee for breach of contract of employment by the employer: Payments in lieu of notice are not pensionable. no contributions are payable; and the period covered by the payment is not membership since it is not a period of actual employment; [Section 1] 3-21

26 the date of termination of employment is the last day of membership. Payment of wages withheld Where a member leaves without notice in the course of a pay period ie. weekly or monthly, and the employing authority withholds payment of wages for the odd days already worked: those days worked reckon as contributing membership; Where member leaves without notice and payment is withheld for the part pay period already worked, the period is pensionable even though no contributions are collected. no contributions are payable, because no pensionable pay has been paid. CHANGE EVENTS 3.18 AGE LIMITS Watch out for age limits. Earliest and latest ages that contributions can be deducted The earliest date a member can contribute to the Scheme is age 16. The latest date they can contribute is age 70. Certain members who belong to the special classes and some MHOs must stop paying contributions at age 65. For more information (go to Appendix 4). To read more about what forms to complete when either joining or leaving, (go to Part 1, Joining the Scheme or Part 2, Leaving the Scheme). Remember! The earliest a member can contribute is age 16. The latest a member can contribute is age 70. [Section 1] 3-22

27 3.19 MEMBERSHIP LIMITS Watch out for membership limits. Maximum amount of membership allowed A member may not earn or pay contributions on more than 40 years reckonable membership at age 60 (55 for special classes) but may then go on to earn a maximum of a further 5 years, making 45 years overall. (Go to Part 4, Calculating Membership, Section 2, Appendix 2 for more information about membership limits.) Remember, MHOs who achieve maximum membership of 45 years before reaching age 60 must continue to contribute until age 60 unless they opt out of the Scheme. Identifying maximum membership Remember members may not pay contributions on more than 40 years membership at 60 (55) and 45 years overall. MHO who reach 45 years membership before 60 must continue to contribute till 60 if they want to retain full Scheme cover Where maximum membership has been achieved and the member is aged over 65 (60 for special classes and MHOs), employers must ensure that cases are identified timeously so that contributions can cease. Watch out for maximum membership and stop contributions Where there is difficulty in determining the precise date when contributions should cease, a written request should be sent to your Client Centre to supply a full membership check and confirm the date on which contributions should cease. When in doubt about the date, ask the for a membership check. [Section 1] 3-23

28 Inform the member Remember! Tell the member contributions have ceased and the effects of this Employers are advised to ensure that as soon as contributions cease, the Scheme member is informed of this, and that benefits will be based on membership and pay up to the date of cessation of contributions and not the date of termination of employment CONTRIBUTIONS Under-deducted contributions Where contributions have been underdeducted: Collect arrears of contributions as soon as possible. Employers should collect the arrears as soon as reasonably possible, preferably by lump sum payment. (go to para read about tax relief.) If a lump sum payment would cause hardship, payment by instalments over a short period may be considered. Eligibility for membership doubtful If an employee s eligibility to join the Scheme is doubtful and employers are therefore not sure whether to collect contributions, they should always be collected in the normal way whilst the question is being determined. Prompt collection and, notification of contributions avoids arrears and other Where there is doubt about eligibility to join, collect contributions whilst making enquiries with the. [Section 1] 3-24

29 administrative problems should the member then transfer to another employer. Over-deducted contributions Where contributions have been deducted in error or at an incorrect rate, employers should make local arrangements to repay them to the employee. No interest is payable. Make local refunds for overdeducted contributions RETROSPECTIVE PAY INCREASES Notifying the Where form SD55 or SD55J has already been sent to the, any changes in pensionable pay and/or contributions will need to be notified on form SD55E. For help with completion of this form, (go to Part 11, Forms & Records). Remember! Tell the about any retrospective pay increases. Important Where application forms for retirement or death benefits have been submitted, the changes to contributions (as well as pensionable pay, etc) must be notified on form AW 171 and NOT form SD55E, (go to Part 11, Forms & Records). [Section 1] 3-25

30 REDUCTION OF PENSIONABLE PAY 3.22 STATUTORY SICK PAY [SSP] Pensionable pay status SSP is pensionable pay on which pension contributions are payable. It should be included as pensionable pay in the total pensionable pay (TPP) for benefit purposes. However, it should never be included as deemed pay. SSP is pensionable. Don t include it as deemed pay. SSP higher than normal rate of pay Where a member's salary reduces in the 8 weeks prior to their period of incapacity for work, their average weekly earnings may place them in a band of SSP higher than their normal actual rate of pay. This situation is most likely to occur where a member moves from whole-time to part-time employment and shortly afterwards becomes sick. In such a case, the higher rate of SSP is still pay on which pension contributions will be due. It should be noted that the NWT TPP for the part-time employment can only be calculated on that payable for the employment in question, and not on a gross up of the SSP and actual basic pay. When SSP is higher than the normal actual rate of pay, it is pensionable. [Section 1] 3-26

31 Example Part-time member s weekly wage SSP for part-time member per week NWT TPP = 40 = = 40 x standard hours part-time hours Deemed pay - What it is When calculating pensionable pay for benefit purposes, any reduction on account of absence from duty, owing to illness or injury, should be added back into pensionable pay. This is commonly referred to as deeming. Deemed pay is pay that would have been paid had the member not been off sick. Calculating contributions on deemed pay Employee contributions should generally be collected on the amount of reduced pensionable pay actually received. To read more about contributions on injury, illness or sick leave, (go to para ) Employer contributions should be collected on actual and deemed pay. That is to say, on the amount that would have been paid, had the member not been on reduced pay because of the absence. Employee contributions are not collected on deemed pay, but employer contributions are. [Section 1] 3-27

32 Calculating deeming for bonus and special duty payments Bonus and special duty payments, which are not paid during periods when members are absent due to sickness, should be deemed as follows: Remember! To deem in bonus and special duty payments not being paid when a member is absent on sick. Where there are REGULAR bonus or special duty payments they should be deemed at the same rate as the member received in the last complete pay period before the sick absence, and added to any other deemed and/or actual pensionable pay. Where there are REGULAR VARIATIONS in the bonus or special duty payments (eg.where the member works alternate day and night duty on a rota basis), the deemed pensionable pay should be calculated by averaging the payments over the last complete cycle of rota duties before the absence. The deeming is calculated differently depending on the work pattern. Where there are IRREGULAR VARIATIONS in the rota duties and hence the payment of bonus or special duty payments has no established pattern, the deemed pensionable pay should be calculated by averaging the last 3 monthly, normal payments. [Section 1] 3-28

33 Note The deeming periods mentioned above Should relate to normal pay periods And should therefore be adjusted Wherever necessary to exclude Periods of annual leave. Remember! Exclude annual leave periods from deeming. Exhaustion of paid sick leave A member who is still on leave of absence because of illness or injury when their paid sick leave is exhausted will have no further contributions collected and will cease to reckon any further membership. Depending on the length of membership, you may wish to consider ill-health retirement benefits, preservation or a refund of contributions. To read more about this, (go to Part 7, Benefits, Section 4 - Ill-health). Watch out when paid sick leave is exhausted. There is no further membership. Contributions on illness, injury or sick leave Where pensionable pay is reduced or suspended under the Social Security Act 1975, employee contributions are payable on the UNREDUCED amount Where pensionable pay is reduced because of sickness or injury, eg. half pay after the specified period of full pay, employee contributions are payable on the REDUCED amount. Employee contributions are collected on the actual amount paid where pay is reduced because of sickness. [Section 1] 3-29

34 Where allowances, eg. a treatment allowance paid by the DSS, are taken into account in assessing pensionable pay, your Client Centre should be consulted. Until a reply from them is received, contributions should be deducted in respect of such allowances. Assistant Practitioners should be treated in the same way Long term sickness payments payable to Principal Dental Practitioners are not pensionable. Ask the when treatment allowances are taken into account. Long term sickness payments to Principal Dental Practitioners are not pensionable REDUCED PAY ON LEAVE OF ABSENCE OTHER THAN SICKNESS OR INJURY Members must continue to contribute on the amount of pensionable pay they were receiving immediately before they went on leave of absence. This applies whether on reduced pay or no pay. Dental Practitioners must contribute on an amount based on the pensionable pay received in the 3 months immediately prior to the leave of absence. For approved leave of absence, employee contributions are payable based on pensionable pay immediately before the absence MATERNITY PAY AND LEAVE Member does not intend to return to work Employers are advised that they must inform a member who leaves work to have a baby and who does not intend returning to work that they are entitled to extend their pensionable membership to take account of the 14 weeks statutory maternity leave by paying pension contributions. Where Members leaving the Scheme when they go on maternity leave can count the 14 weeks SML as pensionable if contributions are paid. [Section 1] 3-30

35 Statutory Maternity Pay (SMP) or Statutory Maternity Leave (SML) is for 18 weeks, the whole period can be pensionable Where they choose not to pay contributions during unpaid leave, membership will cease to be reckonable for benefits from the date they last paid contributions. How to calculate the contributions payable Where there is entitlement to paid leave, contributions will be based on the actual pay received Where they are on unpaid leave, ie. there is no entitlement to SMP but there is entitlement to SML, contributions will be at the rate of pay immediately before the pay was suspended. Contributions will be paid based on actual pay received. Where they are on unpaid leave, contributions are based on the rate of pay immediately before the pay was suspended. Member intends to return to work A member who intends to return to work following maternity leave can be pensionable for the whole period regardless of whether they are paid or unpaid. This allows the period to reckon towards pension benefits. Contributions should be deducted on the amount of pay actually received. When all pay is suspended, contributions should be deducted based on the amount in payment immediately before the unpaid period started, (go to para ) for more details on how to take account of SMP. Members intending to return to work can be pensionable for the whole period. [Section 1] 3-31

36 Member changes her mind Watch out for cases where a member intending to return changes her mind A member might change her mind and decide not to return to work or she might return to non-pensionable employment ie. opt out. This could occur during a period when she is receiving payments or when all pay is exhausted. In either situation, the member s last day of pensionable membership will be the date on which she last paid contributions. If a member asks for a refund of contributions, see para Statutory Maternity Pay (SMP) For both leavers and those returning to work, if SMP is the only pay received, employee contributions will be collected only on the SMP received. Employer contributions will be collected as though the member was not on reduced pay and be based on the last complete pay period before the absence. (See Section 1 para for more help with calculating the amount of pay on which to base employer contributions when there are pay variations.) If SMP is the only pay received contributions will be calculated on that Where no pay follows SMP, contributions due during the no pay period will be calculated and collected on the rate last paid ie. the rate of the SMP. Refunds of contributions Where contributions have been correctly paid on any part of maternity leave, whether paid or unpaid, they should NOT be refunded to the member. To avoid an arrears situation, membership should extend to [Section 1] 3-32

37 the last day for which contributions have been paid, and that date recorded as the date of termination. The employer should advise their Client Centre of any adjustments. Note These procedures should only be followed where there is difficulty in collecting arrears of contributions. Employers should make members aware that contributions are payable both on paid and unpaid maternity leave when they make a statement of intention to return to work. Remember to tell members that contributions are payable on both paid and unpaid maternity leave if they intend to return ABSENCE WITHOUT LEAVE Pay on absence without leave Absence without leave is an absence which has been taken without permission or prior arrangement with the employer. A typical example of this would be going on strike. Usually, no salary will be paid during such absences. Absence without leave is absence without the employer s permission. Contributions on absence without leave As there will be no pay for the period, no contributions will be payable and the period cannot reckon as pensionable membership for benefit purposes. The period is not pensionable. [Section 1] 3-33

38 Retrospective agreement to the absence Where the absence is agreed and paid retrospectively, contributions should be collected and the period will reckon for benefits. Where AWOL is agreed retrospectively, contributions are payable and the period pensionable. Recording the absence The number of days lost through absence without leave should be recorded as disallowed days. The employer should determine the number of disallowed days, which should equate to the number of days for which payment has been lost. Weekends or other rest days should therefore be included if payment would normally have been made for these. (For further advice on completing form SD55 go to Part 11,Forms & Records.) Remember to record disallowed days on form SD55. Absence without leave is called disallowed days Where a member who is employed WT is absent without leave for a period of less than a full day, the number of hours for which pay has been withheld should be converted to whole days using the following formula. Watch out for AWOL periods of less than a day which need to be aggregated. [Section 1] 3-34

39 Example hours strike 6 hours strike 2 hours strike TOTAL 12 hours strike Member works 8 hours a day 12/8 = 1.5 = 1 disallowed day Show only WHOLE days, with any part days always being rounded down LEAVE FOR TRAINING WITH THE RESERVE AND CADET FORCES Pay on leave for training with the Reserve and Cadet Forces Members who volunteer for service with the Reserve Forces, with the consent of their employer, or who declare the fact of their membership of a reserve force to their employer at the time of their appointment, are entitled to 1 week s additional paid leave for attendance at annual camp, providing the employer agrees. The additional week should be treated as part of the member s annual leave entitlement and the pay for it is pensionable. Limited leave for training with the Reserve and Cadet Forces is pensionable, if the employer agrees the absence. [Section 1] 3-35

40 Contributions on leave for training with the Reserve and Cadet Forces As the pay is treated as pensionable, contributions should be collected in the normal way and the period will reckon for benefit purposes. Further leave for training with the Reserve and Cadet Forces Members should be free to choose whether any further periods at camp should count as special leave without pay or as part of their normal annual leave entitlement. Where the member chooses to take special leave without pay: full contributions are payable; and Extra absences for training with the Reserve or Cadet Forces can count as special leave without pay, or part of the normal annual leave and is therefore pensionable. the period is reckonable membership for benefit purposes. To read more about leave without pay, (go to para 3.23). Short periods of training for the Reserve and Cadet Forces Members who are required to undergo short periods of training (normally Saturdays and Sundays) in addition to annual camp, may be granted special leave with pay for this if they are unable to arrange for the training to be undertaken at some other offduty time and the employer agrees. The pay would [Section 1] 3-36

41 be pensionable and contributions should be collected in the normal way. Reservists who are called up for service For members of the NHSPS this means that if they are called up for service, they will be regarded as being on leave of absence. For the duration of their call-out, employer and employee contributions are due to be paid on the level of remuneration in payment immediately prior to call-out. The MOD will take responsibility for the employer contributions and have legislated for this procedure. The MOD will communicate with the reservist s civilian employer so that all the arrangements for making such payments can be put in place. It is also possible that the MOD will arrange for the employees contributions to be deducted from his salary and paid as directed by the NHS employer. MOD should not be asked to pay contributions direct to the. The employer should arrange with the MOD for payment to them of all the contributions due. These should then be paid to the Scheme as normal. [Section 1] 3-37

42 3.27 UNTAKEN ANNUAL LEAVE Starting another job before expiry of paid leave Where a member takes up pensionable employment with another NHS employer during a period of paid pensionable leave, contributions are payable with the first employer up to and including the terminal date of leave, then with the second employer from the date immediately following the last day of leave. Where a new job starts before terminal annual leave with the old job has finished, the start date of membership for the new job will be the day after the annual leave from the old job ends. Example Employer A Last day of actual work = Untaken annual leave = 5 days Last day of membership as extended by 5 days untaken annual leave = Employer B Starts work Does not become pensionable with employer B till , ie. the day after membership with employer A, as extended by the untaken annual leave, finishes. Whole-time employments take precedence Whole-time employments take precedence. Where the first employment is PT, it must close the day before commencement of the whole-time post. Where the first job is part-time and the new job is whole-time, the part-time job must end the day before the new job starts. [Section 1] 3-38