CC vouchers - is this policy correct?

[PseudoBadger]

I'm all confused about whether to carry on taking vouchers whilst on ML.

I looked up my employers policy and it says:

"Whilst on maternity leave, unless you have opted out, you will continue to receive childcare vouchers for the full period of maternity leave. No deduction will be made from maternity pay for the childcare vouchers issued during this period. Upon return to work (including any period when outstanding annual leave is taken) payment of childcare vouchers by salary sacrifice arrangement will resume.
However, statutory maternity pay (SMP) is calculated based on the average weekly cash pay you receive during the eight week period, 15 weeks prior to the date of confinement (weeks 17 to 25 of your pregnancy). As Childcare Vouchers reduce your cash pay through salary sacrifice, if the vouchers are taken during this period, it will reduce your entitlement to full SMP. If you do not wish to reduce your entitlement to statutory maternity pay, you are advised to have opted out of the scheme before week 17 of your pregnancy."

Is this correct, that my SMP will be less because I take vouchers? If so, I'd better get cancelling!

[flowery]

That is correct. Most people are better off staying in the scheme and having their SMP slightly reduced but getting free vouchers while they are off, so make sure you check before coming out.

[PseudoBadger]

Thank you :)

[PseudoBadger]

Flowery, do you know if there's a way to work out which option would be better? Or do I get HR to check for me?

[flowery]

Work out your average weekly pay both with and without vouchers.

Work out 90% of both figures

Multiply both figures by 6 to get the amount you'd get in the first six weeks of SMP.

The difference between the two is the extra pay you'd get by cancelling vouchers now. That's figure A.

Then multiply the amount of vouchers you get each month by the number of months you will be on mat leave. That is figure B.

If figure A is less than figure B, which it is for most people, you are better keeping vouchers.

[sleepyhead]

The way I worked it out in my head (very roughly) was:

• If you're only getting SMP and you're planning to take a good few months off then you'd almost certainly be better off keeping the vouchers going. The loss from your SMP will be outweighed by the free vouchers you'll get.
  

• If you're getting enhanced maternity pay from your employer and will only be off during that period (my situation), then the employer will take the cost of the vouchers from your EMP so you're better off stopping the vouchers.
  

• If you're getting EMP but then a period of SMP then I don't know exactly how it would work out...
  

Unless you're on a very low wage, I think the salary sacrifice element will only really affect the 6 weeks on 90% pay, since SMP for the rest of the period is payed at a flat rate (ie you get the same whether you earn £2k a month or £500) which should make the calculation a bit easier.

[PseudoBadger]

Thanks. So does it affect pay for the 33 weeks as well?

[sleepyhead]

Yes, wot she said

[sleepyhead]

No, as the SMP for the other 33 weeks is paid at a flat rate.

[PseudoBadger]

Sorry x post! So after the first 6 weeks I then get 12 weeks with 50% pay on top of SMP. So I'll probably be best off cancelling - but I will work it out!

[sleepyhead]

Yes, they'll take the value of the vouchers out of your extra pay. I don't know if this works on a month by month basis so that you would get "free" vouchers for any extra months that you worked on SMP only though.

[izzyishavingababyAGAIN]

its only the 6 weeks that matters though, as thats the only one based on average pay, if you are taking the full year, the first 18 weeks you pay the vouchers, the next 38 weeks they pay them on top off your SMP

[flowery]

Sorry, I assumed that because of this phrase in your policy

"No deduction will be made from maternity pay for the childcare vouchers issued during this period"

you only got SMP.

I would suggest you contact HR to clarify what is meant by 'maternity pay'. Legally they can continue to deduct from anything you receive over and above, so for the time you are receiving enhanced pay, they could deduct.

But that doesn't mean they will, if they say nothing will be deducted from maternity pay, rather than nothing will be deducted from the SMP portion of your maternity pay...

[izzyishavingababyAGAIN]

I'm having them, because I know they pay for the 3 months when I am on no pay, so its worth it just for that, plus I will pay almost no tax and have a small rebate every month as well.

[PseudoBadger]

Thank you, I'll contact them.

[baffledmum]

Do you receive any other non-cash benefits and perhaps pension contributions through salary exchange?

[PseudoBadger]

I don't have any other salary sacrifice agreements.

[PseudoBadger]

And I take the maximum voucher amount.

[izzyishavingababyAGAIN]

Are you going to take the 3 months on SMP and 3 months no pay? If you are that 6 months where they will be effectively giving you the vouchers. What you need to work out is if that value is more than you will lose when they calculate your 90% for 6 weeks and 50% for 12 weeks.

[PseudoBadger]

I'm still trying to decide about the full year - I took it last time and it was tough money-wise! I'll do the sums and discuss with DP.

[izzyishavingababyAGAIN]

That's the major thing - perhaps if you too the full year and full vouchers you could drop DDs hours in nursery and stockpile the vouchers and pay less when you go back?

[PseudoBadger]

It's definitely an interesting thought.

[notjustamummythankyou]

Yes, definitely work out how much you can save if you stockpile your vouchers.

I'm on mat leave with dc2 at the moment. Both dh and I claim vouchers and I stayed in the scheme during mat leave. I have reduced dc's days at nursery to just one until I go back to work at the end of March. I've worked out that the amount I will have stockpiled plus cc vouchers received each month will effectively pay the nursery bill for both children until the eldest goes to school next September. Not bad when the bill will be nearly £1k for 2 children on 3 days each.

Losing a few quid a week on smp was worth it - and to think I wanted to come out the scheme but missed the deadline .... Eek.

[notjustamummythankyou]

I should just point out that it's only dc1 in nursery for one day a week - I haven't farmed off dc2 quite yet . . .

[nextphase]

Flowery is right, however it needs the caveat that you earn more than SMP per week. Otherwise the flat rate is reduced also, and you'd need to factor that in.

I stacked all mine and DH's up while on ML, and it paid the first 4 months after I went back to work for 2 kids, full time, and 2 mornings a week during ML.

One other consideration is if your planning on doing KIT days. If you do one KIT day in the month, your earnings will be used to buy your CC vouchers before it comes to you.

[baffledmum]

Please bear in mind though that if you received enhanced contractual maternity pay that your employer can deduct the value of your vouchers from that. It is only your SMP that it may not make any deductions from.