Understanding and calculating APP
Assumed pensionable pay (APP) helps us to make sure your employees don’t miss out on pension benefits when they experience a break or reduction in their working hours.
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What is APP?
When a member is away from work and on reduced or nil pay, employers are required to submit the APP figures to LPPA. We use these figures to calculate the member’s benefits so that they continue to build up as if they were still receiving their normal pay.
APP is calculated using the average pay received in the period directly before the member’s absence started. If they are paid monthly, this average is worked out based on the previous three months’ pay. If they are paid weekly, it is based on the previous 12 weeks’ pay.
| Type of leave | APP applies | APP doesn’t apply |
| Sickness or injury | When a member is absent due to sickness or injury and contractual pay is reduced or they are not receiving any pay. | For any part of a leave period when the pensionable pay is more than the APP (for example, if the member takes paid annual leave during a period of sickness). In this instance, the actual pensionable pay should be used instead. |
| Ordinary maternity leave (OML) or ordinary adoption leave (OAL) | When a member is on OML or OAL for the first 26 weeks of leave. | If the member receives pensionable pay, which is higher than APP (for example, a ‘keeping in touch’ day). In this instance, the actual pensionable pay should be used instead. Important: During OML or OAL, APP applies even if the member is not receiving any pay. |
| Paid additional maternity or adoption leave | When a member is on paid additional maternity or adoption leave (generally from week 27 to week 39). | If the member receives pensionable pay which is higher than APP (for example on a ‘keeping in touch’ day). In this instance, the actual pensionable pay should be used instead. |
| Unpaid additional maternity or adoption leave | If the member is not being paid while on additional maternity or adoption leave (typically from week 40 onwards but could start from week 27). This should be treated as authorised unpaid leave. The member can choose to buy back pension for this period through APCs. | |
| Paid shared parental leave | When a member is on paid shared parental leave. | If the member receives pensionable pay which is higher than APP (for example a ‘keeping in touch day’). In this instance, the actual pensionable pay should be used instead. |
| Unpaid shared parental leave | APP does not apply during unpaid shared parental leave. This should be treated as authorised unpaid leave. The member can choose to buy back pension for this period through APCs. | |
| Paternity leave | Applies during periods of paternity leave whether the leave is paid or unpaid. | If the member receives pensionable pay which is higher than APP (for example on a ‘keeping in touch’ day). In this instance, the actual pensionable pay should be used instead. |
| Reserve forces service leave | If a member takes reserve forces service leave and they decide to stay in the LGPS, APP applies for the whole period of reserve forces service leave. The APP figure must be reported to the administering authority as usual. It must also be reported to the Ministry of Defence, who will deduct the member’s contributions from their pay, and cover the cost of the employer contributions (and pay both to the administrating authority). | |
| Parental bereavement leave | When a member is on parental bereavement leave and is receiving some pay. | APP does not apply during unpaid parental bereavement leave. This should be treated as authorised unpaid leave. |
| Industrial action | The member can buy back pension lost during this period through APCs. Note: the employer does not have to pay towards this. | |
| Unpaid Carers Leave | The member can buy back any lost pension via a shared cost APC. | |
| Other periods of leave | The member can buy back lost pension for the authorised unpaid leave but not for pension lost during unauthorised unpaid absence. If the member chooses to buy back within 30 days of returning to work, the employer pays 2/3rds of buy back cost (not for strike pay), subject to certain conditions. |
If you prefer to use our old APP calculator, you can use the PDF guide below and download the APP calculator spreadsheet. Alternatively, use our latest calculator above.
FAQs
Calculating APP
There is no provision to recalculate APP following a backdated pay award. You must calculate assumed pensionable pay using the pay received in the three months / 12 weeks immediately before the absence. If a backdated pay award is received during an absence, you should ignore it when working out APP.
If the member was on reduced sick pay you would use the full 3 months prior to the reduction in pay. For example, if the member started to receive reduced sick pay in June 2023, you would need to calculate APP based on March, April and May.
If they were not on reduced pay you should calculate APP based on the full 3 months prior to the date of death. For example, if death in service occurred in January you would use December, November and October to calculate the APP.
If 12 complete weeks’ pay does not exist, the LGPS Payroll Guide says the employer should use whatever number of complete periods are available (see page 20).
For example, if the member has only worked for one calendar month the employer should work out the pay for this period and scale it up to a full year to calculate the APP.
You can substitute it for a higher figure. Note, you must take into account the member’s pensionable pay for the previous 12 months.
Paying pension contributions
Yes, members pay pension contributions on their pay, whereas employers pay pension contributions on the APP figure and reports it to the administrator.
The employer is not liable to cover their contributions. In this instance, it would be the Ministry of Defence who would be responsible.
APP and the 50/50 option
They will be moved to the main section of the pension scheme (to build up full benefits) from the beginning of the next pay period, if the period of no pay crosses two pay periods (weekly or monthly pay).
APP and additional voluntary contributions (AVCs) and additional pension contributions (APCs)
If a member is paying extra in the LGPS, different rules apply when they are absent, depending on the type of additional contributions they are paying and the reason for their absence. For example:
- When they are absent from work because of sickness or injury, they don’t need to pay APCs in any period that they’re unpaid. Whereas, with AVCs, they can continue to pay these contributions and choose to vary the amount they are paying.
- When they are absent from work because of child–related leave or reserve forces leave, while AVCs may continue, APCs must continue to be paid by the member as if they are not away from work.
For more information, visit the If you are away from work page of the LGPS website
