What are pensionable earnings?

What counts towards your pension – and how is it worked out? 

Pensionable earnings are the part of your pay we use to work out your pension contributions. What’s included depends on the rules of your employer’s scheme – let’s break it down. 

What’s usually included? 

It’s not just your basic salary. Some schemes count: 

• Salary or wages 

• Overtime 

• Commission 

• Bonuses 

• Statutory payments like sick pay or maternity pay 

However, things like travel expenses and one-off reimbursements usually don’t count. 

How pensionable earnings are calculated 

There’s more than one way to do it – your employer picks the method when the scheme is set up. Here are the most common options: 

1. Unbanded earnings (gross qualifying earnings)

Your full pay before deductions is used. 

Example: 
Sophie earns £2,300 in salary and £200 in overtime. 
Her pensionable earnings = £2,500 
That full amount is used to calculate contributions. 

 

1. Banded earnings

Only the portion between two thresholds is counted. For 2024–25, those are: 

• Lower: £6,240 

• Upper: £50,270 

Example: 
Dave earns £2,100 a month. 
His pensionable earnings = £2,100 minus the lower threshold (annualised). 
That works out to £1,860 used for contributions that month. 

Other ways some schemes do it 

Some employers use a self-certified method. That just means they’ve chosen one of these alternatives: 

1. Basic pay only

Only your core salary counts. Bonuses, overtime, and extras are left out. 

Example: 
Megan earns £2,400 basic pay. 
That’s her full pensionable amount each month. 

1. At least 85% of total pay

Your pensionable earnings are set at 85% or more of everything you earn. 

Example: 
Alice earns £3,000 including bonuses. 
Her pensionable amount = £2,550 (85% of total pay). 

1. Total pay

Everything counts – salary, overtime, commission, and bonuses. 

*Example: 
Liam earns £3,200 in total. 
That full amount is used to calculate his contributions. 

*This example is taken from the Money Helper website, using the 2024/5 thresholds. 

Why it matters 

How your pensionable earnings are defined affects how much you and your employer contribute. That means it can have a real impact on your long-term savings. 

The method is chosen by your employer when the scheme is set up and is based on their payroll setup and scheme rules. 

Want to check what applies to you? 

You can find the details in the Thrive app – or ask your HR or Payroll team for a full breakdown. 

Still unsure? We’re here to help. 

• Call: 01452 922000 

• Email: help@mythrive.co.uk 

• Live chat: Via the Thrive website 

Knowing what counts helps you understand where your money’s going and how it’s building your future.