New “Spotlight” explains impact on pensions of maternity leave

The Pensions Advisory Service (TPAS) has published a “Maternity Leave Spotlight” outlining the impact on pensions of maternity leave. It also covers what happens when the employee returns to work and the impact of having a baby on the state pension. Although aimed at employees rather than employers, the Spotlight is a useful summary for employers of the law in this area.

The Spotlight confirms that employers and employees are required to continue contributing to a pension scheme during maternity leave as follows:

  • During ordinary maternity leave and the first 13 weeks of additional paternity leave where the employee is entitled to statutory maternity pay (SMP): the employer must contribute based on the employee’s pay before maternity leave, but the employee’s contributions are based on her actual pay
  • During the final 13 weeks of additional maternity leave where the employee is entitled to SMP: contributions are only payable by either party if this is stated in the pension scheme rules or it’s in the employee’s employment contract
  • During ordinary maternity leave where the employee is not entitled to SMP: the employer must contribute based on the employee’s pay before maternity leave, but employee contributions are not required
  • During additional maternity leave where the employee is not entitled to SMP: contributions are only payable by either party if this is stated in the pension scheme rules or it’s in the employee’s employment contract. 

On return to work after maternity leave, the Spotlight states that the employee will be able to pay extra contributions to make up for any period of unpaid leave and that, if she chooses to do this, her employer will also be required to contribute.

Posted in Employment & Payroll

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