Statutory Maternity Leave (SML)
If you are an employee, SML is for 52 weeks. SML consists
of Ordinary Maternity Leave (OML) and Additional Maternity Leave
(AML). OML covers the first 26 weeks. AML covers the
next 26 weeks.
Statutory Maternity Pay (SMP)
SMP is payable for employees who:
- have been employed without a break for at least 26 weeks;
and
- remain employed into the 15th week before the week the baby is
due.
Part weeks count as full weeks. The employee must also be
earning, before tax, an average of £97 per week (2010/11
rate).
SMP is payable at 90% of average weekly earnings, with no upper
limit, for the first 6 weeks, and is then payable at the
£124.88 per week (2010/11 rate), or at 90% of average weekly
earnings, whichever is the lowest, for a further 33
weeks.
Therefore, SMP is payable for a maximum of 39 weeks. Some
employers may decide to pay more than the statutory minimum
amounts.
Impact on those in Final Salary and Career Average Pension
Schemes
Any paid maternity leave must be treated as
pensionable service. Benefits are based on the salary before going
on maternity leave (this includes any Death in Service
benefit). Employee contributions are based on actual pay,
whilst the employer must pay a contribution based on the salary the
employee would have received had they not gone on maternity leave.
This includes the right to any pay increase that would have
occurred.
Any unpaid maternity leave which follows a
period of paid maternity leave does not count as pensionable
service. However, employment before and after the break must
be treated as continuous.
In some schemes, the employee can make up any unpaid leave by
way of extra contributions. In some generous occupational money
purchase schemes, as long as she returns from maternity leave and
remains in the scheme for a set period of time, the employer makes
up any missed contribution.
Impact on those in Money Purchase, Personal and Stakeholder
Schemes
A woman on paid maternity leave
will continue to pay contributions. The rate will apply to
the amount of pay actually received.
If the employer normally contributes to the plan, they will
still be required to continue contributing during paid maternity
leave. These contributions will be based on the pay the employee
would have received had she not gone on maternity leave. In
schemes where the rules state that the employer will match the
employee's contribution, the employer must still contribute at the
level the employee would normally pay and not what she is actually
paying during her maternity leave.
Any death benefits payable under the scheme must be based on the
same benefits as would have been paid had the employee been working
normally.
During a period of unpaid
maternity leave, neither the employee nor the employer will be
expected to contribute. The employee may, if she chooses, pay
contributions during this period but the employer will not have a
duty to contribute (unless their contract of employment states
otherwise).
Q & A's
Make sure you are aware of the rules of your scheme on maternity
leave. This is especially the case if you intend to extend your
maternity leave and, as a result, are unpaid. This could make a
difference to your benefit accrual if you are in a final salary
scheme or the contributions paid into a money purchase scheme.
For any personal pension plans you may have, you should check
what the conditions are should you stop contributing for a while.
In some older plans, you may be penalised. The new stakeholder
pension arrangements do not penalise people for stopping and
starting contributions.
No. The same rules apply no matter how many children you are
expecting.
Yes. They will have to continue paying at the same rate they
were paying before you went on maternity leave, i.e. based on your
pre-maternity leave salary. However, once you are on unpaid leave,
there is no obligation for your employer to continue.
Once you have ended one contract and started a new one you will
be treated as having left for one period of service and a new
joiner for the next. These periods will not be combined or the
break treated as continuous.
In most schemes you can stop and start paying AVCs when you
like, but you should check with the scheme administrators.
If you decide not to contribute, as required by the scheme's
rules, you will normally be treated as having left the scheme.
