The Teachers’ Pensions Regulations 2010

CHAPTER 1 Contributable Salary

Contributable salary

15.—(1) The contributable salary of a person (T) is the total of—

(a) the amounts mentioned in paragraph (2), if T is a school teacher for the purposes of section 122 of EA 2002, or

(b) the amounts mentioned in paragraph (3) in any other case

but (in either case) does not include any amounts mentioned in paragraph (4).

(2) The amounts are—

(a) the amount paid to T by T’s employer in respect of T’s pensionable employment in accordance with any pay order;

(b) the amount paid by T’s employer to T in respect of T’s pensionable employment in satisfaction of any contractual liability arising out of sick leave or maternity, paternity, parental or adoption leave;

(c) the amount paid by T’s employer to T in respect of T’s pensionable employment in satisfaction of any statutory liability arising out of sick leave or maternity, paternity, or adoption leave;

(d) the amount equal to any part of T’s salary which T has given up the right to receive pursuant to a salary sacrifice arrangement.

(3) The amounts are—

(a) the amount of the salary, wages, fees and other payments paid to T for T’s own use by T’s employer in respect of T’s pensionable employment;

(b) the amounts mentioned in paragraph (2)(b) to (d);

(c) the amount of any payment made to T—

(i) where the payment is by way of bonus made as part of a pay settlement which applies to all persons, or to all persons of a particular class or description, employed at the institution at which T is employed, or

(ii) where the payment is calculated by reference to T’s performance or the performance of the institution at which T is employed and is paid pursuant to arrangements under which T’s employer (E) makes payments calculated by reference to the performance of E’s employees or the performance of the institution.

(4) The amounts are—

(a) any benefit in kind or the money value of such a benefit other than one which falls within regulation 16 (contributable salary - residential accommodation);

(b) the amount of any payment by way of bonus other than a payment falling within paragraph (3)(c));

(c) the amount of any payment in respect of overtime;

(d) the amount of any payment by way of travelling or expense allowance;

(e) the amount of any payment in consideration for the loss of, or the agreement to give up the right to, paid leave under T’s contract of employment;

(f) the amount of any payment in lieu of notice to terminate T’s contract of employment;

(g) the amount of any payment by way of an honorarium;

(h) the amount of any payment in respect of any duties that are not part of T’s duties in T’s capacity as a teacher;

(i) if T is employed as mentioned in paragraph 12 of Schedule 2 (teacher in a European School), any amount not payable by, or money value of a benefit in kind not attributable to, the Secretary of State.

(5) This regulation is subject to regulation 17 (cap on contributable salary).

(6) In this regulation—

“pay order” means an order under section 122 of EA 2002 for the time being in force and includes any document referred to in such an order;

“salary sacrifice arrangement” means—

(a)

if T is a school teacher for the purposes of section 122 of EA 2002, an arrangement specified in any pay order under which T gives up the right to receive part of T’s gross salary in return for T’s employer’s agreement to provide T with benefits in kind as specified in the pay order;

(b)

in any other case, an arrangement of the type mentioned in sub-paragraph (a) in which T’s employer’s agreement is to provide T with benefits in kind of an identical description to those specified in any pay order for the time being in force.

Contributable salary - residential accommodation

16.—(1) In this regulation “residential benefits in kind” means the money value of—

(a) any residential accommodation provided to a person (T) in connection with T’s employment,

(b) any heat, lighting or water provided free in respect of the accommodation, and

(c) any council tax paid on T’s behalf in respect of the accommodation.

(2) Residential benefits in kind are also part of T’s contributable salary if the conditions in paragraph (4) are met.

(3) But if the total of the money value of the residential benefits in kind exceeds one sixth of the aggregate of the amounts mentioned in regulation 15(2) or, where applicable, regulation 15(3)(a) and (b), the excess is not part of T’s contributable salary.

(4) The conditions are—

(a) that T’s employer (E) makes a written application to the Secretary of State, within 3 months of the start of the employment or (if later) the first day on which the accommodation is provided, for the money value of residential benefits in kind to be part of T’s contributable salary,

(b) the Secretary of State is satisfied that it is expedient for residential accommodation to be provided to T in connection with T’s employment, and

(c) E certifies that E will review the value of the residential benefits in kind at the times referred to in paragraph (5) and provide written notification to the Secretary of State of the results of the reviews.

(5) The first review must be carried out within 2 years of the start of T’s employment or, if later, the first day on which the accommodation is provided, and each subsequent review must be carried out within 2 years of the previous review.

(6) Where, pursuant to paragraphs (2) to (5), the money value of residential benefits in kind is part of T’s contributable salary, that money value is to be treated as having formed part of T’s contributable salary from the date of the start of T’s employment or (if later) the first day on which the accommodation was provided.

(7) Where the employer does not carry out the necessary reviews in accordance with paragraph (5) or notify the Secretary of State of the results of each review, the Secretary of State may treat the residential benefits in kind as never having been part of T’s contributable salary and, in that event, the Secretary of State is to repay to the employer the amount specified in paragraph6 (8) together with interest as specified in paragraph (9).

(8) The amount is the difference between—

(a) all contributions referred to in regulation 30(1)(a) and (b) paid by the employer during the period when the residential benefits were treated as part of T’s contributable salary, and

(b) all contributions referred to in regulation 30(1)(a) and (b) which would have been payable during that period without the residential benefits being treated as part of T’s contributable salary

less the amount of the tax chargeable on contributions of that amount under section 205 of FA 2004.

(9) The interest is interest on the contributions referred to in paragraph (8) at the rate of 3% per year, compounded with yearly rests, from the first day of the financial year following that in which they were paid to the date of repayment.

(10) This regulation is subject to regulation 17 (cap on contributable salary).

Cap on contributable salary

17.—(1) In this regulation a “relevant person” is a person who—

(a) entered pensionable employment after 31st May 1989 with no right to count any period before 1st June 1989 as reckonable service and is not a person to whom paragraph (2) or (3) applies,

(b) was in pensionable employment immediately before 1st April 2008,

(c) has not made an election under regulation C1A(2)(1) of TPR 1997 (removal of the cap on contributable salary), and

(d) is not a person to whom regulation C1(8) of TPR 1997 has ceased to apply because the person began a new employment (see regulation C1A(5) of TPR 1997) or because the person’s contract of employment was varied (see regulation C1A(8) of TPR 1997).

(2) This paragraph applies to a person who was in pensionable employment before 1st June 1989 and who resumed pensionable employment following—

(a) an absence on maternity leave in respect of which she was entitled to a right to return from leave pursuant to Chapter 1 of Part 8 of the Employment Rights Act 1996(2),

(b) a period of secondment or additional period of absence necessarily attributable to that secondment, or

(c) (where neither sub-paragraph (a) nor (b) applies), a break in teaching employment not exceeding one year.

(3) This paragraph applies to a person who was in comparable United Kingdom service before 1st June 1989 and who subsequently enters pensionable employment provided that there has not been a period of more than one year between cessation of employment in comparable United Kingdom service and entering pensionable employment.

(4) In the case of any relevant person, in any tax year or part of a tax year in which the person’s annual rate of contributable salary, calculated in accordance with regulations 15 and 16 exceeds the permitted maximum, that excess does not form part of the person’s contributable salary.

(5) But if the circumstances specified in paragraphs (6) or (9) apply to that person paragraph (4) will cease to apply in accordance with paragraphs (10) and (11).

(6) Subject to paragraph (8), the circumstance is that the relevant person begins a new employment.

(7) For the purposes of paragraph (6) a person is to be treated as beginning a new employment if the person—

(a) begins pensionable employment with a different employer, or

(b) continues in pensionable employment with the same employer but in a new post under a different contract of employment.

(8) Paragraph (6) does not apply where the person begins pensionable employment with a different employer by reason of a transfer of undertakings.

(9) The circumstances are that—

(a) the contract of employment of the relevant person (P) is varied so that P will be required to undertake functions which are materially different from those which P was required to undertake before the variation was made, and

(b) the employer gives written notice to the Secretary of State of the variation of P’s contract of employment.

(10) In the case of a person to whom the circumstance specified in paragraph (6) applies, paragraph (4) ceases to apply immediately before the date on which the person begins the new employment referred to in paragraph (6).

(11) In the case of a person to whom the circumstances specified in paragraph (9) apply, paragraph (4) ceases to apply immediately before the date on which the variation in the contract of employment takes effect.

(12) In this regulation “permitted maximum” has the meaning in regulation 1(2) of the Registered Pension Schemes (Modification of the Rules of Existing Schemes) Regulations 2006(3).

(1)

Regulation C1A was inserted by S.I. 2008/541.

(2)

1996 c.18. Chapter 1 of Part 8 was substituted by Schedule 4 to the Employment Relations Act 1999 (c. 26) and amended by section 17 of the Employment Act 2002 (c. 22).

(3)

S.I. 2006/364