Maternity leave and your pension: what your employer still pays in

Time off to have a baby can mean less going into your pension, and the gap can grow over the years. The good news is that the rules protect quite a lot of it, as long as you know what to check. Here’s what happens to your workplace pension and your State Pension while you’re on maternity leave.

Your workplace pension while you’re on paid leave

While you’re getting maternity pay from your employer (SMP, or more if your employer pays it), which is usually the first 39 weeks:

Your employer’s contributions are based on what you were paid before your leave, plus any pay rises while you’re away. So they should keep paying in as if you were still on your normal salary.
Your own contributions are based on what you’re actually paid, so they usually go down when your pay drops to SMP.

For example, if your employer normally pays 5% of your salary into your pension, they should keep paying 5% of your normal salary, while your own contribution is worked out on your maternity pay. Mistakes are common, so check your payslips and pension statements while you’re on leave.

If you’re on unpaid leave

If you take a full year off, the last 13 weeks (weeks 40 to 52) are usually unpaid. Pension contributions usually stop during unpaid leave, unless your contract or scheme rules say otherwise.

If you’re getting Maternity Allowance from the government instead of SMP, MoneyHelper says your employer’s contributions usually carry on for the first 26 weeks, while your own usually stop. Check with your employer or pension scheme.

If you pay in through salary sacrifice

With salary sacrifice, you give up some salary and your employer pays it into your pension instead. Those payments count as employer contributions, so the full amount should carry on during your paid leave, based on your normal salary. Salary sacrifice can also lower the earnings used to work out your maternity pay, and if it takes your average earnings below £129 a week, you won’t get SMP at all. Ask payroll how your scheme works before the 8-week period used to work out your SMP.

Final salary and career average schemes

If you’re in a defined benefit scheme (often called final salary or career average), paid maternity leave usually keeps building up your pension. Unpaid leave usually doesn’t. Ask your scheme administrator how your leave will be counted.

Your State Pension

You usually need 35 qualifying years of National Insurance for the full new State Pension, and at least 10 to get any. Maternity leave doesn’t have to leave a gap:

On SMP: SMP counts as earnings for National Insurance. If you don’t earn enough in a tax year for it to count as a qualifying year, you can apply for Class 1 credits.
On Maternity Allowance: you get Class 1 credits automatically.
Child Benefit: registering for it gives you Class 3 credits automatically until your child is 12, even if you choose not to take the payments. This is one of the simplest ways to protect your State Pension while you’re at home with a baby.

If the parent claiming Child Benefit is working and doesn’t need the credits, a grandparent or other family member who looks after the child may be able to apply for them instead. You can check your State Pension forecast on GOV.UK.

Ways to close the gap

Don’t opt out to save money. If you leave your workplace pension while you’re on leave, you lose your employer’s contributions too.
Top up if you can. Paying a little extra while you’re on leave, or when you go back, can make a big difference over time, and you get tax relief on it.
Think about your partner. If their pay hasn’t changed, they could pay into your pension for a while, or increase their own.
Ask about employer matching. Some employers pay more in if you do, which helps if you go back part-time.
Check your statements. Make sure your employer’s contributions were based on your normal pay.

You can usually get tax relief on pension contributions up to 100% of your earnings, within an annual allowance of £60,000 for most people. If you earn less than £3,600 a year and pay into a relief at source pension (such as most personal pensions), you can still pay in up to £2,880 and the government tops it up to £3,600.

Paternity and shared parental leave

The same principles apply to other paid family leave, such as paternity leave and Shared Parental Leave: your employer’s contributions should be based on your normal pay while you’re being paid.

Questions people ask

Does my employer have to pay into my pension on maternity leave?

Yes, while you’re on paid maternity leave. Their contributions should be based on your normal pay, plus any pay rises. During unpaid leave they usually don’t have to, unless your contract says so.

Will maternity leave affect my State Pension?

Not if you claim Child Benefit or get National Insurance credits. Registering for Child Benefit gives you credits until your child is 12, even if you don’t take the payments.

Should I stop my pension contributions to cover the drop in pay?

It’s worth thinking carefully first. If you opt out, your employer usually stops paying in too, so you lose more than you save. Your own contributions already drop when your pay does.

What if I go back part-time?

Your contributions will be based on your new pay, so your pension will build up more slowly. Topping up, or checking whether your employer matches extra contributions, can help.