Maternity Leave
Rules for those whose baby is due on or after 1 April 2007
If you are an employee, Statutory Maternity Leave is for 52 weeks. Statutory Maternity Pay (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 £90 per week (2008/09 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 £117.18 per week (2008/09 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.
Maternity leave consists of Ordinary Maternity Leave and Additional Maternity Leave. Ordinary Maternity Leave is the first 26 weeks of maternity leave. Additional Maternity Leave is maternity leave additional to the first 26 weeks of maternity leave, up to 52 weeks.
Occupational 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.
Personal Pensions (including GPPs and Stakeholders)
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, he 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).
- I am about to go on maternity leave, what should I do about my pension?
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.
- I am expecting twins, does this make a difference?
No. The same rules apply no matter how many children you are expecting.
- My employer pays to my GPP, does he have to continue?
Yes. He will have to continue paying at the same rate he was 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 him to continue.
- What happens if I leave employment but then come back at a later date?
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.
- What happens to my AVCs?
In most schemes you can stop and start paying AVCs when you like, but you should check with the scheme administrators.
- What happens if I don't make contributions during paid leave?
If you decide not to contribute, as required by the scheme’s rules, you will normally be treated as having left the scheme.
Q & As
