Pension contribution, maternity pay & childcare vouchers

loopa1

Hi all
A friend of my recently queried her pension contribution whilst on maternity leave - she believes she may be paying too much. Her employer pays her basic pay as normal, but then deducts the same amount to offset the payment (since she's not currently at work). She's entitled to, and is in receipt of, her employer's maternity pay and SMP. She pays a % of her basic pay for her pension contribution despite being on maternity leave and in receipt of a lower "income" in the form of maternity pay.

Is this correct?

I suspect her employer is doing this to allow her to maintain her full contributions whilst on maternity leave, but her belief is that it should be a % of the pay she actually receives, ie. on the much lower amount based on maternity pay.

Also, prior to being on maternity leave, she mentioned that her pension contribution is a % based on basic pay only, despite having over £200 a month deducted for childcare vouchers. When I checked how my employer (different to hers) calculates my pension contribution, they deduct my childcare voucher amount first and base my pension contribution on the remaining amount.

Can both of these ways of calculating pension contributions be correct???

Many thanks.

Alexland

Try not to think of a pension contribution as a payment being overcharged and consider it more an investment in the future.

It's probably a good thing that the normal contribution is continuing through the maternity leave as it means the employer contribution is also likely to be continuing at normal rate and her pension will not be reduced in value as a result of the maternity leave.

The purchase of childcare vouchers should make no difference to the amount contributed to the pension however the mechanics of how the payslip is calculated may vary if the employer is using a salary sacrifice arrangement to save the employee and employer from National Insurance.

Alex