Date posted: 30/01/2020


  • HR managers who deal with high earners
  • Payroll managers


  • To note the contents
  • Update your systems and processes accordingly


  • With effect from 06 April 2020


1. Before 06 April 2006, HM Revenue & Customs (HMRC) limited the amount of salary that employers could use when calculating the pensionable pay of a member who joined the Civil Service pension arrangements on or after 01 June 1989. HMRC called this limit the “earnings cap” or “permitted maximum”.

2. Although HMRC no longer require us to limit benefits to the earnings cap, the rules of classic, classic plus and premium continue to restrict benefits in this way. We calculate the earnings cap using the same method previously used by HMRC.

Earnings cap level for 2020-21

3. From 06 April 2020 to 05 April 2021, the earnings cap will be £170,400.

Who does the earnings cap apply to?

4. Members of nuvos and alpha are not subject to the earnings cap. However, any “linked” benefits calculated on a final salary basis are capped unless they were transferred on an uncapped basis under the Club transfer provisions.

5. For members of classic, classic plus and premium, the earnings cap applies to all civil servants who joined, or returned to, the Civil Service on or after 01 June 1989. However, there are exceptions to this rule, which you can find in EPN 238.

Employer and employee contributions

6. If a member’s pensionable earnings are subject to the earnings cap, their contributions must be calculated on their salary below the cap. The same applies to employer contributions, known as Accruing Superannuation Liability Charges (ASLCs). You should advise the member that the earnings cap applies to them. If a member joins partway through a year, or their salary rises above the cap during a financial year, you must apply it based on their monthly salary.

7. The rate for employee contributions made after 01 April 2015 is set after the pensionable earnings cap has been applied (where applicable).

Treatment of part-time pay

8. The cap applies proportionately where a member works part time.

9. For example, a member earns £103,300 a year for a 3-day week. The full-time equivalent salary is £172,166.67, which is above the cap for full-time pay. The pro-rata cap is: £170,400 x 3 ÷ 5 = £102,240.

10. ASLC bands are determined by full-time equivalent salary, which means that the ASLC banding will relate to the cap of £170,400. On the other hand, member contribution banding is determined by part-time salary, which means that member contribution banding will relate to the pro-rata figure. The annualised pensionable earnings figure for the purpose of setting the member contribution rate in the above example will therefore be £102,240. Once the bandings are determined, both ASLCs and member contributions are levied against the pro-rata figure of £102,240.

11. Please note: This document replaces the following Employer Pension Notices (EPNs): EPN 140, EPN 154, EPN 206, EPN 238, EPN 272, EPN 294, EPN 316, EPN 353, EPN 376, EPN 415, EPN 449, EPN 485, EPN 529 and EPN 565.


If you have a question about the distribution of EPNs, or would like to receive them in a different format, please contact

You can find electronic copies of the Employer Pension Guide, all current EPNs and forms in the Employer section.

This notice is for employers and should not be issued to scheme members.

Members can find information about their pension by visiting

30 January 2020
Last updated:
24 April 2023