When things change
If you decide to take parental leave, you can continue to build up your pension benefits.
If you decide take parental leave (maternity leave, paternity leave or adoption leave), you should remain a member of your workplace pension scheme, and you and/or your employer will continue to make contributions, unless you decide to stop contributing. If you do stop contributing, your employer will also stop their contributions and you will be treated as a having left the scheme.
If you’re a member of a defined benefit pension scheme, then any periods that you spend on paid parental leave are treated as pensionable service. This means that you will continue to accrue pension benefits, based on the level of your pensionable earnings before you started the parental leave. The contributions that you pay are, however, based on your actual earnings during your parental leave.
If you decide to take a period of unpaid leave after your paid parental leave, your unpaid leave doesn't count as pensionable service, but your service before and after the period of unpaid leave is treated as continuous service. When you return to work, you can pay additional contributions to cover the period of unpaid leave when you weren’t contributing.
If you’re a member of a defined contribution pension scheme, you continue to pay contributions into the scheme while you’re on paid parental leave. Your employer’s contributions are based on your pensionable earnings before you started the parental leave, while your contributions are based on your actual earnings during the parental leave. If your employer matches your contributions, they must continue to match the same level of contributions that you were paying before the parental leave started.
If you decide to take a period of unpaid leave after your paid parental leave, you don't need to continue contributing during the period of unpaid leave. Your employer may also cease contributing, unless your contract of employment states otherwise. When you return to work, you (and your employer) may be able to pay extra contributions, depending on the scheme’s rules.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.