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Which gross figure is used to calculate your pension

09 Sep 2018, 12:46

I have been wondering whether having all the different options to reduce your weekly income tax and NI by opting into sips and PSE etc reduces your final salary pension. For years I purchased additional leave and I am now thinking I may have mad a mistake and my pension will be less due to this. I was never advised as to whether buying extra leave would reduce my future pension, I wonder if anybody on here could clarify if I have indeed potentially reduce my future pension and if buying shares in the new Scheme would also reduce pension payments in the future?

Which gross figure is used to calculate your pension

09 Sep 2018, 14:12

The amount of pension you get is based on your pensionable pay. Which is basic pay plus pensionable allowances(if you get them) minus the LED for section C members of the RMPP.

Paying into pensions/AVC's, and the new partnership & matching share plan all benefits you in the form of lower income tax via tax relief and/or lower NIC's via PSE.
The effects of PSE on pensionable pay is covered in the Q&A's in the PSE booklet, where it says:

Pensionable pay
Your pensionable pay stays the same if you take part in PSE. This is the amount of your pay that is used to work out pension contributions and pension benefits under the rules of the RMPP or RMDCP. Pensionable pay differs from basic pay depending on which plan you are a member of, and if you are an RMPP member, which section of the plan you are a member of.

So paying AVC's SAYE, etc shouldn't have any effect.

To be honest I don't know if POAL affects your pensionable pay, but I've never seen or heard it mentioned, so I assume not. Have you noticed any reductions in benefits on your annual pension statements or the 'pensions contrib pay' on your wage slip as a result of POAL or anything else?

Which gross figure is used to calculate your pension

19 Sep 2018, 20:05

Thanks RobertT for the clarification, my old payslips are filed away and I am not able to access them at the moment but I will compare the pensionable pay figures when I get the chance.

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