Calculation for Pension Contributions for Employees on Maternity Leave.

A common question that we are asked relates to pension contributions on maternity pay.

Pension deductions can be made lawfully from Statutory Maternity Pay (SMP) and there are rules in place to guide to the level of employee and employer contributions.

Calculation for the employee contributions are based on the actual maternity pay received (if required by the scheme rules), although pension contributions can be paid at pre-maternity leave level in order to get future benefits derived from a final salary scheme.

Different rules apply to the employer. Contributions are calculated, where an obligation exists, on the employee’s normal pay and not on the maternity rate of pay. An employer must continue to pay at this rate for the full 26 weeks ordinary maternity leave period, even if the employee isn’t receiving maternity pay. During additional maternity leave, the employer’s contribution continues whilst the employee receives pay but can stop at week 39 when statutory payments cease or when occupational maternity pay ceases if longer.

If you have any questions concerning SMP or any other payroll matters, please contact the payroll team on 01904 464100 or email Julie Gunnell at jgunnell@garbutt-elliott.co.uk.