terminology

 

 


TermDefinition
 

REFERENCE SALARY

This term is used to describe the rate of Basic Salary and/or of any other additional pay before the reduction described in column A of the table in paragraph 2.1 of the PensionSMART Supplementary terms and conditions of employment [pdf]‌ has been applied. 
 

PENSIONSMART SALARY

This term is used to describe the rate of Basic Salary and/or of any other additional pensionable pay after the reduction described in column A of the table in paragraph 2.1 has been applied. 
 

PENSIONABLE SALARY

The term “Pensionable Salary” refers only to pay which counts for pension purposes.  It comprises the sum of basic salary plus any other pensionable pay elements to which you are entitledbefore the reduction described in column A of the table in paragraph 2.1 has been applied.  It does not include Non-pensionable pay elements.
 

BASIC SALARY

The statement of terms and conditions in your contract of employment with the College sets out the salary scale for your grade, and within them your Basic Salary, or it refers to a fixed salary which is personal to you.  (In many employment offer letters it is referred to simply as “salary” because this is your only contractual pay entitlement.)  It is always referred to on payslips as “Basic Salary”.  Rates of Basic Salary will continue to be referred to in correspondence and in published sources such as the College web-site by their normal, unadjusted values (i.e. as Reference Salary).
 

OTHER PENSIONABLE PAY ELEMENT

In addition to Basic Salary, some employees receive additional earnings components which count towards their pension.  Examples include London Weighting Allowance (for those employees still remaining on the national pay scales), various honoraria and allowances for special duties, shift allowances and “on-call” supplements.   Under PensionSMART, your salary is reduced in the manner described in paragraph 2.1 (column A of the table), and in return an equivalent amount will be paid by the College as an employer pension contribution (as in column C of the above table). All such pensionable pay elements will continue to be referred to in correspondence and in published sources such as the College web-site by their normal, unadjusted values (i.e. as Reference Salary), notwithstanding your participation in PensionSMART.
 

NON-PENSIONABLE PAY ELEMENTS

A few employees also receive Non-pensionable components within their total pay.  Examples include monthly supplements for functions which are wholly unrelated to their duties for the College, but which are nevertheless paid through the College payroll system (e.g. for acting as branch secretary to a learned society, or for work in support of private clinical practice or external consultancy work). 

All bonuses also fall into this category, as do taxable re-imbursement of expenses, for example relocation expenses over £8,000.

Non-pensionable pay elements are not affected in any way by participation in PensionSMART, and will appear on payslips separately.

 

ADJUSTED SALARY

Your Adjusted Salary is your PensionSMART Salary (i.e. the sum of your Basic Salary and Other Pensionable Pay Elements reduced by the relevant percentage indicated at paragraph 2.1 above), plus any Non-pensionable pay elements you may receive. The latter are unaffected by participation in PensionSMART.

PAYE and NIC will be calculated on your Adjusted Salary. These statutory deductions, together with some other statutory and voluntary deductions (e.g. season ticket loan repayments) are deducted from your Adjusted Salary to produce your ‘net' take home pay.

 

DEFERRED BENEFITS

This is when you leave the pension scheme before your retirement date and your benefits remain within the pension scheme. Your basic pension and lump sum are calculated at your leaving date and indexed to retirement in accordance with the pension scheme rules.  PensionSMART has no bearing on this.
 
Summary of the table's contents