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Pensionable Pay

Also known as: Pensionable Earnings, Pensionable Salary

Definition

Pensionable pay is the portion of your NHS salary used to calculate your pension contributions and benefits, including your basic pay plus certain regular allowances but excluding overtime for full-time staff and bonuses.

Understanding your pensionable pay is crucial for estate planning, as it determines the death benefits your family would receive if you die in service.

What Does Pensionable Pay Mean?

Under the National Health Service Pension Scheme Regulations, pensionable pay is the salary basis used for calculating both your pension contributions and benefits. The NHS Business Services Authority (NHSBSA) administers the scheme. Your pensionable pay determines which contribution tier you fall into (ranging from 5.2% to 12.5% as of April 2025) and forms the foundation for your retirement pension and death benefits.

Pensionable pay includes basic salary plus regular payments like London weighting, recruitment and retention premia, unsocial hours payments, and on-call availability. It excludes overtime for full-time staff, bonuses, discretionary payments, and expenses. Sarah works full-time as an NHS nurse earning £35,000 basic plus £2,000 London weighting and £1,500 overtime annually. Her pensionable pay is £37,000—the overtime doesn't count.

Part-time staff follow different rules. Additional hours up to 37.5 hours per week are pensionable when paid at basic hourly rate. This was formally clarified in 2025 regulations. James works part-time (30 hours weekly) earning £42,000. When he picks up extra shifts bringing him to 37.5 hours weekly, those additional hours are pensionable because he remains under full-time equivalent.

For estate planning, pensionable pay determines death benefits. If you die in service, the lump sum is typically twice your pensionable pay. Dr. Amira receives £60,000 basic plus £3,000 recruitment premium. Her £63,000 pensionable pay means her family would receive approximately £126,000 if she died in service. Your exact pensionable pay appears on your annual NHSBSA benefit statement.

Common Questions

"Does overtime count as pensionable pay in the NHS pension scheme?"

It depends on your working pattern. Full-time NHS staff do not receive pensionable credit for overtime (unless partially retired within the last 12 months). Part-time staff have additional hours up to 37.5 hours per week automatically treated as pensionable if paid at their basic hourly rate. Any hours above 37.5 hours per week are non-pensionable for all staff.

"Why does pensionable pay matter for my NHS pension?"

Pensionable pay determines both your pension contributions (which tier you fall into) and your final pension amount. Only earnings classified as pensionable contribute toward your retirement benefits. Non-pensionable elements like overtime (for full-time staff) and bonuses don't count toward your pension calculations or death benefits.

"What's included in pensionable pay besides basic salary?"

Pensionable pay includes your basic salary plus regular payments like London weighting, High Cost Area Supplement, unsocial hours payments, on-call availability payments, recruitment and retention premia, and paid leave (sick, maternity, paternity, adoption). It excludes bonuses, discretionary payments, expenses, non-consolidated pay awards, and overtime for full-time staff.

Common Misconceptions

Myth: My pensionable pay is the same as my total salary on my payslip.

Reality: Pensionable pay is almost always lower than gross pay. If you work overtime (full-time), receive bonuses, or get non-consolidated pay awards, these appear on your payslip but don't count toward your pension. A full-time nurse earning £40,000 basic plus £3,000 overtime has £40,000 pensionable pay, not £43,000.

Myth: Overtime is never pensionable in the NHS, regardless of working pattern.

Reality: Part-time staff have additional hours up to 37.5 hours per week treated as pensionable at basic hourly rate. Only full-time staff have all overtime excluded (unless partially retired in the previous 12 months). This was formally clarified in April 2025 regulations.

  • NHS Pension Scheme: The defined benefit pension scheme for NHS workers, which uses pensionable pay to determine both contribution rates and retirement benefits.
  • NHS Pension Death Benefits: The lump sum payment (typically twice pensionable pay) and survivor pensions paid when an NHS worker dies in service.
  • Defined Benefit Pension: A pension scheme type like the NHS Pension Scheme that relies on pensionable pay for benefit calculations, unlike defined contribution schemes.
  • Final Salary Scheme: The 1995 Section of the NHS Pension Scheme uses Total Pensionable Pay from the best of the last 3 years to calculate retirement benefits.

Need Help with Your Will?

Understanding your pensionable pay helps you assess the death benefits your NHS pension provides—typically twice your pensionable pay if you die in service. This knowledge is essential for comprehensive estate planning.

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Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.