Pension contributions whilst on maternity leave

laura84x

I recently read on here and other sites that an employers pension contributions should be based on the employee's salary before taking maternity leave, whilst my contributions are based on the actual pay i receive.

Is this set in stone or is it down to an employers discretion? Does this apply to the full time that i'm off or does it apply to a specific time period?

I checked my payslips after reading the above and contributions from the employer have been made based on what i have been paid each much. I did have full pay for a few months but afterwards it dropped to SMP which was significantly lower for the duration of my leave.

I have spoken to my payroll team who advised the contributions are made based on what i earn each month so if it was only SMP it would be based on that alone. Can someone confirm the actual process so i can reply to them please?

Thanks!

Marcon

laura84x said:

I recently read on here and other sites that an employers pension contributions should be based on the employee's salary before taking maternity leave, whilst my contributions are based on the actual pay i receive.

Is this set in stone or is it down to an employers discretion? Does this apply to the full time that i'm off or does it apply to a specific time period?

I checked my payslips after reading the above and contributions from the employer have been made based on what i have been paid each much. I did have full pay for a few months but afterwards it dropped to SMP which was significantly lower for the duration of my leave.

I have spoken to my payroll team who advised the contributions are made based on what i earn each month so if it was only SMP it would be based on that alone. Can someone confirm the actual process so i can reply to them please?

Thanks!

Have a look at https://www.moneyhelper.org.uk/en/family-and-care/becoming-a-parent/maternity-and-paternity-leave-and-your-pension

Silvertabby

There is no 'one rule fits all' in this scenario - it's down to the individual pension scheme rules.  

Marcon

Silvertabby said:

There is no 'one rule fits all' in this scenario - it's down to the individual pension scheme rules.  

...and the over-riding legislation, especially in relation to DC schemes (and from the sound of it OP is in a DC rather than a DB scheme). 

laura84x

Thanks both!

I had a read through the link and under the DC section it mentions what i had read before - Your contributions will be based on your actual earnings. Your employer contributions will be based on your earnings before you went on leave.

I'm not sure how to proceed - I just want to make sure I'm not losing out on income later in life.

Albermarle

laura84x said:

Thanks both!

I had a read through the link and under the DC section it mentions what i had read before - Your contributions will be based on your actual earnings. Your employer contributions will be based on your earnings before you went on leave.

I'm not sure how to proceed - I just want to make sure I'm not losing out on income later in life.

What it says is that employer contributions should be based on your earnings before you went on maternity leave, until a certain point in time. At which point they become more discretionary .

For employee contributions what it does not make clear is that you can always vary these anyway.
The main restriction is that if you are enrolled in a pension scheme, there must be a minimum contribution of 8% ( 5% from you and 3 % from the employer) . If the employer adds more than 3% you can add less.
You can of course add more if you want to, subject to tax relief limits.

Marcon

laura84x said:

Thanks both!

I had a read through the link and under the DC section it mentions what i had read before - Your contributions will be based on your actual earnings. Your employer contributions will be based on your earnings before you went on leave.

I'm not sure how to proceed - I just want to make sure I'm not losing out on income later in life.

I think sending them the link I've given above and asking them to confirm if you are receiving contributions in line with the legislative requirements would be no bad idea. Your employer/scheme can offer a 'better' deal, but they can't dip below the minimum.

laura84x

Albermarle said:

laura84x said:

Thanks both!

I had a read through the link and under the DC section it mentions what i had read before - Your contributions will be based on your actual earnings. Your employer contributions will be based on your earnings before you went on leave.

I'm not sure how to proceed - I just want to make sure I'm not losing out on income later in life.

What it says is that employer contributions should be based on your earnings before you went on maternity leave, until a certain point in time. At which point they become more discretionary .

For employee contributions what it does not make clear is that you can always vary these anyway.
The main restriction is that if you are enrolled in a pension scheme, there must be a minimum contribution of 8% ( 5% from you and 3 % from the employer) . If the employer adds more than 3% you can add less.
You can of course add more if you want to, subject to tax relief limits.

Yeah i did read it was for 26 weeks, however it doesn't seem to have been the case going by my payslips at least. 

I received full pay for 12 weeks but then after that the pension contributions are based on what the reduced wages are.

laura84x

Marcon said:

laura84x said:

Thanks both!

I had a read through the link and under the DC section it mentions what i had read before - Your contributions will be based on your actual earnings. Your employer contributions will be based on your earnings before you went on leave.

I'm not sure how to proceed - I just want to make sure I'm not losing out on income later in life.

I think sending them the link I've given above and asking them to confirm if you are receiving contributions in line with the legislative requirements would be no bad idea. Your employer/scheme can offer a 'better' deal, but they can't dip below the minimum

Thats a good idea - thanks.