Any advice? Employee pension contribution during maternity leave

ella555

Hiya,

I've been given contradicting advice from my workplace and would appreciate any advice. I am part of a defined contribution scheme and due to go on SMP. My payroll has advised me that, both the employer and the employee contributions will continue based on my normal salary. And payroll has therefore recommended that I reduce or suspend my personal contributions so I am not seeing a massive cut in my SMP.

(My internet research reveals payroll is wrong, and that personal contributions are based on a % of the pay you are actually receiving, instead of your normal pay.)

On the other hand, my work pension advisor (independent and not employed by my work), has told me that under the scheme, the employer will cover both their contribution AND mine whilst I am on SMP. But he said this "screws" the company, and it did sound like something he wasn't supposed to reveal (he asked me not to say anything).

I have tried calling the pensions company directly who have said it is up to my employer. I have nothing explaining this in my contract or pension pack, and it is quite frustrating to make a decision based on verbal advice.

I have requested some documentation to clarify. If, indeed the pension advisor is correct, would it be immoral to increase my personal contributions before I go on SMP? I don't want to "screw the company". But it would be a valuable contribution to my pension. What is taking advantage, and what is abusing a benefit?

I have found this online which indicates it is a grey area:
"There is a debate whether, in a DC context, theemployer should supplement the member's contributions to make up the differencebetween the member's contributions based on actual pay received, and what themember contributions would be if they were based on her normal earnings. The legislation is unclear but many commentators believe that the employer isnot obliged to provide a top-up. "

xylophone

https://www.gov.uk/employee-rights-when-on-leave
http://www.dwp.gov.uk/publications/specialist-guides/technical-guidance/ni17a-a-guide-to-maternity/statutory-maternity-pay-smp/smp-amount/

Debt_Free_Chick

How are your contributions paid? Are they by salary sacrifice or SMART contributions?

ella555

My contributions are paid by my employer (5% of my salary - flat rate), and then however much contribution I want to make taken out of my salary (currently I choose to pay 6%). Its not a SMART scheme as far as I know, my salary didn't change when I joined it...

Debt_Free_Chick

ella555 wrote: »

My contributions are paid by my employer (5% of my salary - flat rate), and then however much contribution I want to make taken out of my salary (currently I choose to pay 6%). Its not a SMART scheme as far as I know, my salary didn't change when I joined it...

OK, thanks. Your contributions should be 6% of whatever you're actually paid, whilst on maternity leave. So if you only get SMP, then your contribution is 6% of your SMP.

Your employer has to pay 5% of the pay you would have received, if you had not been on maternity leave.

So your contributions will be lower (if you just get SMP) but your employer's contributions have to be at the full rate, based on your full salary.

Re the quote in your first post - some lawyers believe that your employer should also top your contributions up to the full rate, too. But the law is not clear on that.

Contributions are only due for any period of maternity leave for which you're paid. If you have unpaid mat leave, then contributions are not due, unless your employment contract states otherwise.

Hope this helps