Assumed pensionable pay (APP)

APP for adding to cumulative pay

APP is the average pensionable pay for the 3 months/12 weeks before the start of the pay period when reduced/ no pay, child-related leave etc began, less non-regular lump sums.  This figure is then grossed up to the annual rate plus any regular lump sums received. If the calculated APP figure is materially different from what the member would normally have received, then the employer may substitute a revised level of pay to reflect what the member would have normally received.

APP for ill-health enhancement/ death in service

APP is the average pensionable pay for the 3 months/12 weeks before the start of the pay period when the ill-health or death occurred (including any APP credited to the cumulative), less non-regular lump sums.  This figure is then grossed up to the annual rate plus any regular lump sums received. If the calculated APP figure is materially different from what the member would normally have received, then the employer may substitute a revised level of pay to reflect what the member would have normally received.

Examples of APP Calculations

The following examples indicate how APP is calculated for a range of employment types as well as illustrating the different method of calculating APP for ill-health enhancement or death benefits.  Sample extracts of completed LGS15s are included after each example.                                     

Member earns: £3,148.17 per month to 31 July 2014
£3,211.08 per month from 1 August 2014

Went onto half pay sick from 9 July 2014
Went onto no pay sick from 9 January 2015
Retired due to ill-health on 15 June 2015

APP for CARE pension:

Need to calculate APP from 1/04/2015 – 15/06/2015 as the member was in the CARE scheme and
did not receive full pay during this time.

To calculate APP from 1/04/2015 – 15/06/2015 take the last 3 months that the member received
full pay – (8/04/2014 – 8/07/2014)

April/May 2014 £3,148.17
May/June 2014 £3,148.17
June/July 2014 £3,148.17

The member received the same pay each month – £3,148.17

The method for how to work out the APP from 1/04/2015 – 15/06/2015 will vary depending on how each employer normally calculates a day’s pay. We have used the following method:

April and May 2015
£3,148.17 x 2 months = £6,296.34
1st – 15th June 2015
£3,148.17 x 11/22 = £1,574.09
£7,870.43

Because the member was on APP for the whole period between 1/04/2015 – 15/06/2015 the above figure (£7,870.42) used in the APP Component column of section 5 will also be used for the column: Main Section Pensionable Pay (Including APP) in section 5.

Annual APP for Ill-Health Enhancement

Annual Assumed Pensionable Pay = £3148.17 x 12 = £37,778.04

Member earns:
£332.42 per week to 3 January 2015
£339.72 per week from 4 January 2015

Went onto half pay sick from 6 February 2015 to 4 April 2015
Back to full pay from 5 April 2015
Retired due to ill-health on 27 June 2015

The employee has CARE membership from 1 April 2015 so APP is needed from 1/04/2015 – 4/04/2015 as they were on half pay during this time.

Annual APP for CARE Pension

Go back 12 weeks before the member went to half pay – (14/11/2014 – 5/02/2015). This must be split into two calculations as the member received a pay rise during this time.

14/11/2014 – 3/01/2015 (7 weeks) x £332.42 = £2,326.94
4/01/2015 – 5/02/2015 (5 weeks) x £339.72 = £1,698.60
£4,025.54 – APP for 12 weeks

To get the weekly rate of APP – £4,025.54 / 12 = £335.46 per week

We only need APP for 1/04/2015 – 4/04/2015 (3 working days), not the full week (5 working days)
as shown above.

£335.46 / 5 x 3 (working days) = £201.28

Pensionable Pay from 5/04/2015 – 27/06/2015
£339.72 x 12 (weeks) = £4,076.64

Pensionable Pay (including APP) from 1/04/2015 – 27/06/2015
£201.28 + £4,076.64 = £4,277.92

APP for ill-health enhancement

Go back 12 weeks prior to the pay period where ill-health occurred – (29/03/15 – 20/06/15).

The member was on notional pay (pre 15) for 2/5 and APP for 3/5 for 1 week (29/03/15 – 4/04/15) and full pay for 11 weeks (5/04/15 – 20/06/15) of this time.

Full pay – £339.72 x 11 (weeks) = £3,736.92
+ £337.17 (1 week notional + APP) = £4,074.09
£4,074.09 x 52.2 (weeks) / 12 = £17,722.29

Member earns:
£638.68 4 weekly and works 46.4 weeks per year
Went onto half pay sick from 13 November 2014
Retired due to ill-health on 31 May 2015

APP for CARE Pension

Need to calculate APP from 1/04/2015 – 31/05/2015 as the member was in the CARE scheme and did not receive full pay during this time.

To calculate APP from 1/04/2015 – 31/05/2015 take the last 12 weeks that the member received full pay – (4/08/2014 – 26/10/2014). Assume that the last full pay period ended on 26/10/14.

4/08/2014 – 31/08/2014 £132 all holiday – no pay
1/09/2014 – 28/09/2014 £638.68 4 weeks’ pay
29/09/2014 – 26/10/2014 £319.34 2 weeks’ pay

£638.68 + £319.34 = £958.02 for 6 weeks
£958.02 / 6 = £159.67 per week

Therefore APP from 1/04/2015 – 31/05/2015 =
8 4/5* weeks x £159.67 = £1,405.10

Because the member was on APP for the whole period between 1/04/2015 – 31/05/2015 the above figure (£1,405.10) used in the APP Component column of section 5 will also be used for the column Main Section Pensionable Pay (Including APP) in section 5.

*APP will only be applied to the contractual weeks the member would have been paid for. E.g. APP would not be applied in July if they did not work the month of July as per their contract.

Annual APP for Ill-Health Enhancement

Look at the pay earned in the 3 months/12 weeks prior to the start of the pay period where ill-health occurred. The member was on APP for this whole period, therefore:
£159.67 x 46.4 (weeks) = £7,408.69 per year

Member earns:
£638.68 4 weekly and works 49.1 weeks per annum
Went onto half pay sick from 13 November 2014
Retired due to ill-health on 31 May 2015

APP for CARE Pension

Need to calculate APP from 1/04/2015 – 31/05/2015 as the member was in the CARE scheme and did not receive full pay during this time.

To calculate APP from 1/04/2015 – 31/05/2015 take the last 12 weeks that the member received full pay – (4/08/2014 – 26/10/2014)

4/08/2014 – 31/08/2014 £480.35: 2 weeks’ pay (£319.34) plus 10 days RF
1/09/2014 – 28/09/2014 £638.68: 4 weeks’ pay
29/09/2014 – 26/10/2014 £480.35: 2 weeks’ pay (£319.34) plus 10 days RF

Excluding retainer fees £1,277.36 / 8 (week’s pay) = £159.67 per week

Therefore APP from 1/04/2015 – 31/05/2015 =
8 4/5* weeks x £159.67 = £1,405.10

Because the member was on APP for the whole period between 1/04/2015 – 31/05/2015 the above figure (£1,405.10) used in the APP Component column of section 5 will also be used for the column Main Section Pensionable Pay (Including APP) in section 5.

*APP will only be applied to the contractual weeks the member would have been paid for. If in the month of August the member was to receive 4 weeks’ worth of retainer fees at ½ pay then 2 weeks APP should be applied.

APP for Ill-Health Enhancement

Use 3 most recent pay periods before the pay period in which ill-health retirement occurred. The member was on APP during this time.

£159.67 x 49.1 = £7,839.80

Member earns:
£1,000 per month to March 2015
£1,100 per month from April 2015

Went onto half pay from 1 May 2015
Retired due to ill-health on 30 June 2015

APP for ill-health enhancement

Go back 3 months from the start of the pay period on which ill-health retirement occurred – (March, April and May)

Pensionable pay for March = £1,000
Pensionable pay for April = £1,100

Need to calculate APP for May as the member did not receive full pay during this time.

APP for May

(Take the last 3 months that the member received full pay – February, March and April)

Feb £1,000
March £1,000
April £1,100
£3,100

£3100 / 3 = £1,033.33 per month

Multiply by 2 to get the APP for May and June = £2,066.66

To get the annual APP –
Pensionable pay in March £1,000
Pensionable pay in April £1,100
APP in May £1,033.33
£3,133.33
£3,133.33 / 3 x 12 = £12,533.32

To get pensionable pay for section 5
Pensionable pay in April £1,100
APP for May and June £2,066.66
Total = £3,166.66