07 October 2015

The information contained within the following news articles have been pre published. The articles were published on the dates indicated and the information contained within these issues include references to taxation, legislation, regulation and other issues or concerns that may no longer apply

Maternity Leave and Pension Rights


Statutory Maternity Leave


Statutory Maternity Leave is for a period of 52 weeks.  The first 26 weeks are referred to as ordinary maternity leave which can then be followed by a further 26 weeks called additional maternity leave.  Entitlement to both types does not depend on your length of service with your employer.

Statutory Maternity Pay (SMP)


SMP is the minimum level of pay an employee can receive whilst on maternity leave.  It is available for employees who:


  • Have at least 26 weeks continuous service up to the qualifying week (see later);
  • Have average weekly earnings before tax of at least the lower earnings limit which for the current tax year is £102 per week


The qualifying week is the 15th week before the employee’s baby is due and average earnings must be calculated over a period of at least 8 weeks including the qualifying week.


SMP is payable for a maximum period of 39 weeks and stops if you return to work.  The current rates for 2011/12 are 90% of average weekly earnings for the first 6 weeks with no upper limit.  For the next 33 weeks the lower of £128.73 per week and 90% of employees’ average weekly earnings will be paid.  After 39 weeks nothing more is paid.  Please remember that these are minimums and some employers may have more generous schemes.


Statutory Adoption Leave and Pay


This is similar to maternity pay and is available to individuals who adopt or to one member of a couple who adopt.  There is a right to 52 weeks leave, the first 26 weeks referred to as ordinary adoption leave followed by a further 26 weeks of additional adoption leave.  It is available to employees who:


  • Are ‘matched’ with a child by an adoption agency; and
  • Have at least 26 weeks continuous service before adoption


Statutory adoption pay is available to employees with average weekly earnings of at least the lower earnings limit (£102pw 2011/12).  It is payable for up to 39 weeks at a rate of £128.73 per week or 90% of average weekly earnings if lower.


Paternity Leave and Pay


Introduced in 2003 in the UK, Paternity leave allows qualifying employees to take a maximum of 2 consecutive weeks leave following birth of a baby or adoption.  To qualify the employee must have at least 26 weeks continuous service up to the 15th week before either the baby is due or they have received notification of a match for adoption.


The employee must be the biological father or the mothers husband/partner or child’s adopter or husband/partner of child’s adopter.


Employees in civil partnerships and same sex relationships also qualify.  Paternity pay is £128.73 per week or 90% of their average weekly earnings.  Again some employers may pay more.


Additional Paternity Leave and Pay


Introduced in April 2011 this works in conjunction with maternity or adoption leave.  Employees can take up to 26 weeks of additional leave if child’s mother/adopter returns to work before the end of their full entitlement to maternity or adoption leave.  If the mother/adopter was entitled to SMP or SAP then additional statutory paternity pay can be paid to the end of the 39 week period that the maternity or adoption pay would have ended.  Again the rate is £128.73 per week or 90% of weekly earnings if lower.


Pension Rights


For either maternity or adoption leave, pension rights are based on the periods of paid and unpaid leave.  If the employer offers a more generous scheme that the statutory scheme then the pension rights are affected as well.


If you are a member of a final salary scheme then during paid leave benefits must accrue based on full salary with employee contributions based upon actual pay.  Any unpaid leave doesn’t have to count towards pensionable service although a more generous employer can still include it.  Employment before and after unpaid leave is treated as continuous with any death benefits based on employees normal salary.


For money purchase schemes including personal pensions and stakeholder pensions, employee contributions are based upon actual pay and employer contributions are based upon the employee’s normal salary.  During unpaid leave, there is no requirement for either employee or employer contributions.  Any death benefits based upon salary must be based upon normal salary.

Paul Dixon
Chartered Financial Planner

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