work based pension and maternity leave advice

vincentvega_2

Hi,


I am looking for advice on the following situation.


I am in a work based pension scheme where my employer contributes an equal amount.


I have been on maternity leave and only received statutory pay.


I have not contributed to the pension scheme whilst on maternity leave.


I was not asked/informed about opting out of the scheme whilst on maternity.


Today I have been told by my employer that I need to repay the contributions that my employer paid during my maternity leave, as they paid this by error, which you can imagine is a large sum of money over the 40wks I have been on maternity.
Can anyone help and advise me if this is legal, and if they can request the funds back, can they request it directly from myself?, as I obviously haven't received the money in the first place, its in the pension scheme.


Many thanks in advance.


Kate

rpc

If contributions were made in error, then the solution is to "un make" them by taking out of the pension. This is allowed by HMRC where there is genuine error.

But:

Under the Equality Act, most employers interpret the rules to mean that employer contributions must be maintained while you are being paid. Your contributions should be kept up too, but theirs are based on pre-maternity earnings and yours are based on actual earnings.

See http://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/parental-leave

Is your employer suggesting that they were not obliged to pay pension contributions at all? If so, they are likely to be discriminating unlawfully.

The caveat is that most of the maternity leave "equality" issues have not been tested in a court/tribunal that sets precedent.

vincentvega_2

Thanks for the reply.

It looks like that is what they are trying to say.
They are stating that due to myself not contributing, (as I was only receiving statatoury pay), they shouldn't have either, but in there error they did.
The letter I recieved from my employer was very unprofessional and hasty.
In no way have I opted out of the pension or signed any documentation to say so.

Thanks again

rpc

vincentvega wrote: »

They are stating that due to myself not contributing, (as I was only receiving statatoury pay), they shouldn't have either, but in there error they did.

In no way have I opted out of the pension or signed any documentation to say so.

My (layman's) view is that if you did not opt out then the error is not that they made contributions, but that they did not take yours. Your pension contribution should have been taken from your SMP.

The best solution, in my view, is that you pay up the contributions that should have been made. Note that if you normally pay 5% then your contributions would be 5% of SMP and not of your normal salary. Employer contribution is worked out based on normal salary.

The alternative is that they reclaim the contributions from the pension scheme. It gets more complex because you probably cross two tax years. You are probably an easier target.

Which choice would you prefer? The first would be financially better for you as you get all that free money from your employer (albeit locked in a pension scheme).

Reply (in writing) giving your proposal, you might want to call ACAS or the Pension Advisory Service first.

http://www.acas.org.uk/index.aspx?articleid=1461
http://www.pensionsadvisoryservice.org.uk/

A blanket policy of not paying pension contributions while employees are on maternity leave is likely to be in breach of the Equality Act and unlawful discrimination. Plenty of employers breach that act, but it can be an expensive mistake.

jamesd

Is this a salary sacrifice pension? I'm asking because in salary sacrifice the employer has to pay both your and their contribution at full rate.