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Flexing pension just prior to mat leave- legal advice needed.

(10 Posts)
Applesauce29 Tue 13-May-14 06:34:40

Does anyone know what the legal rules are around this. Apparently my employer has to continue paying my pension contributions while I receive SMP. The HR woman I met with was very very negative about flexing the amount up just prior to mat leave, and said the company wouldn't "expect" this. Is there anything to legally stop me flexing salary just before mat leave so that they have to pay as much as possible eg 70% (ie abusing the loophole)? Or could they stop this?

splendide Tue 13-May-14 09:27:15

They don't need to cover your payments just their matched payments. So there is only an advantage in flexing up to the maximum they'll match which you should really be at anyway to be tax efficient. If your employer matches payments to 70% then that's amazing but I'd be very surprised. Mine is matched to 4% which is marketish these days (sigh).

Applesauce29 Tue 13-May-14 12:18:30

Mine doesn't match but pays their own fixed contribution. I believe they also have to pay my contribution for the 39 weeks I get SMP (all they pay). Contribution currently 2%, but wondering if they can stop me flexing it up and making them pay higher- seems to good to be true!

PenguinsHatchedAnEgg Tue 13-May-14 12:55:32

People are going to need to understand a lot more about how your pension works to give you decent information I'm afraid.

You say that your employer pays a fixed contribution - they will need to continue that. What percentage is it?

What about your contribution. How is that set up? Is it a simple deduction from salary or a formal salary sacrifice? They don't have to pay salary during mat leave, just continue benefits, so how your pension contributions are set up can affect their obligations.

Also, what are the rules about the level of contribution/salary sacrifice you are allowed to make? When are you allowed to make changes to your own contributions (some employers have, for example, a fixed date twice a year). In general in these areas, employers don't need to make special rules for you, just apply their normal ones (or at least, that was the law when I last looked into this).

Applesauce29 Tue 13-May-14 16:54:14

It's a formal salary sacrifice scheme, and apparently I can change contribution levels at any time, to any level (subject to still having salary above minimum wage). HR person didn't really want to let me know how to claim as much as possible (company really against women going on mat leave and having to pay benefits).

I would feel bad trying take maximum advantage if they paid anything over SMP, but they're super tight in that respect, which is surprising for a medium city firm!

Gingerandcocoa Tue 13-May-14 20:09:49

Your employer really will pay YOUR pension contribution? Are you sure? Have a look at this link..

I have just skim read it but it looks like they have to pay their contribution during the time you're on SMP, not your contribution...

PenguinsHatchedAnEgg Tue 13-May-14 20:57:51

Ginger- I am not up on the very latest law. I hoped someone more knowledgeable might come along (*Applesauce*- it might be worth starting a thread in employment). However, it certainly used to be the case that the fact it was set up as salary sacrifice meant that it became a non-cash benefit (the whole reason it works from a tax perspective is that it ceases to be your contribution. You have a lower salary and the whole contribution is theirs). Thus, just as with childcare vouchers, there was an argument that they had to be continued in full.

OP- Are you planning to go back? Regardless of the letter of the law, if you are then also worth considering goodwill for flexibility, flexible working requests, etc?

Gingerandcocoa Tue 13-May-14 21:06:23

Penguins I might look into it..... I'm going on mat leave in 3 weeks and would definitely be up for increasing my contributions to 50% if i can!!!

PenguinsHatchedAnEgg Tue 13-May-14 21:08:35

Worth looking into certainly, though I must admit it has been a few years since I looked into it, so a lot might have changed.

Applesauce29 Wed 14-May-14 06:58:26

I still have 8 weeks ish before I go on mat leave, (well hol before may leave) will look at doing it then. Thanks to everyone for their input. I do appreciate that if it is possible to do this, and I do make the most of it, future HR relations are likely to be strained. Guess u just have to weigh up options... My company's not really supportive of flexible working (even at 6 months pregnant I was expected to put in time at weekends during busy periods).

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