Remuneration for the purposes of an employer pension scheme cannot include which of the following?

• A. Overtime
• B. Expenses refunded tax free by the employer
• C. Benefits in kind
• D. Bonuses

Answer: (B)

The key idea is what counts as remuneration when calculating pensionable earnings for an employer pension scheme. Pensionable earnings include the pay and other earnings that truly reflect compensation for work—things like overtime and bonuses, and in many schemes even the cash equivalent of certain benefits in kind.

Money that is simply reimbursements of expenses, paid tax-free by the employer, is not actual remuneration. It’s compensation for costs incurred, not earnings from work, so it does not form part of pensionable earnings. That’s why reimbursed expenses (tax-free by the employer) cannot be included when determining pension contributions.

So, while overtime, bonuses, and the cash value of certain benefits in kind can be part of pensionable earnings, expenses refunded tax-free by the employer cannot.