Employee contributions from 1 April 2015 – examples

Setting the contribution rate

Member joins mid-month

A member, who is monthly paid, takes up employment and joins the Alpha scheme on 15 June 2015. Their annual pensionable earnings (ie. their annual rate of basic pay plus allowances or other payments which count as pensionable) is £33,500.

June pay:

Pensionable earnings = (£33,500/12) x (16/30) = £1,488.89

Annualised pensionable earnings = (£1,488.89 x 12) = £17,866 Contribution rate band 2 = 4.60%

Gross member contribution = £1,488.89 x 4.60% = £68.49

July pay:

Pensionable earnings = (£33,500/12) = £2,791.67

Annualised pensionable earnings = (£2,791.67 x 12) = £33,500 Contribution rate band 3 = 5.45%

Gross member contribution = £2,791.67 x 5.45% = £152.15

Late pay award

A premium member, who is monthly paid, has their basic pay increased from £20,000 to £20,300.  The pay award is received in August 2016, but backdated to October 2015.

August pay:

Pensionable earnings = (£20,300/12) = £1,691.67Arrears of pensionable earnings = [(£20,300 - £20,000)/12] x 10 = £250

Pensionable earnings for month = £1,691.67 + £250 = £1,941.67

Annualised pensionable earnings = (£1,941.67 x 12) = £23,300

Contribution rate band 3 = 5.45%

Gross member contribution = £1,941.67 x 5.45% = £105.82

Sept pay:

Pensionable earnings = (£20,300/12) = £1,691.67

Annualised pensionable earnings = (£1,691.67 x 12) = £20,300

Contribution rate band 2 = 4.60%

Gross member contribution = £1,691.67 x 4.60% = £77.82