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Maternity leave and your pension: a guide

Preparing for a baby involves much more than buying baby clothes and setting up a nursery. It’s important to consider your finances, including your pensions. To help you navigate this, we’ve teamed up with PensionBee to create this essential guide.

By Gemma Wilcock | Last updated Apr 18, 2023

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When planning your maternity leave, you should be looking at how your finances will be affected. One of the things you should also consider is your pension.

While retirement may feel like a long time off yet, it’s important to make sure your employer continues paying into your pension while you take time off with your family. We know that managing your finances can be confusing and with so much to think about at this time, you might not be sure what you’re entitled to.

With the help of pension experts PensionBee, we’ve looked at what financial support you can expect to get when you take time off, and what happens to your pension during maternity leave.

How long is maternity leave in the UK?

If you are employed, you are entitled to take Statutory Maternity Leave (SMP), which is 52 weeks off. SMP is typically made up of two parts: Ordinary Maternity Leave, which is the first 26 weeks, and Additional Maternity Leave, the remaining 26 weeks. 

You don’t have to take the whole twelve months off, but you do have to take the first two weeks after your baby is born. You have the option to share this leave with your partner, so you could either take a full twelve months of maternity or paternity leave or both, which is called Shared Parental Leave

How much maternity pay you’ll get will vary depending on your employer, however at the very least you should be able to claim Statutory Maternity Pay (SMP), as long as you have worked for 26 weeks by the 15th week before your due date. 

You’ll receive this for up to 39 weeks, getting 90% of your average weekly earnings (before tax) for the first six weeks and then £156.66 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks. If you decide to take longer off, this will be unpaid so you’ll want to factor this into your calculations.

Bear in mind that tax and National Insurance will be deducted from SMP. If you’re not sure, you can use the government’s maternity pay calculator to work out how much you could get. 

How long is paternity leave?

As with the SMP, you need to have worked for your employer for 26 weeks by the 15th week before the due date and earn at least £123 a week. This can be either one or two weeks off, but it must be taken in one go. Statutory Paternity Pay is the same amount as SMP. 

Maternity leave for freelancers and self-employed

Freelance women account for almost half of the freelance workforce (IPSE, 2022). Working for yourself can be very beneficial to family life, but how does this affect your maternity leave?

While you won’t be eligible for SMP, self-employed mums can claim Maternity Allowance (MA) for up to 39 weeks. To be eligible for this, you need to have paid Class 2 National Insurance for at least 13 of the 66 weeks before your baby’s due. 

You can also claim MA if you’re employed but are not eligible for SMP. You should receive £156.66 a week or 90% of your average weekly earnings (whichever is less).

What happens to my pension during maternity leave?

Woman on laptop holding baby bump

If you’re employed and entitled to maternity pay, you should continue to get the same benefits, such as paid holiday, employee protection from unfair dismissal, employee benefits and employer pension contributions.

Due to Auto-Enrolment, all employers have to enrol their staff into a company pension scheme and contribute at least 3% of their annual salary to their pension. If you’re paying into a workplace pension scheme with employer contributions, they must continue to contribute while you’re claiming SMP - so for at least 39 weeks. After that time, if you decide to take longer off, your employer doesn’t have to make contributions unless you’ve agreed to it in your contract.

They should make the contributions automatically, however, check that you remain in your pension scheme during your maternity leave and continue to make your payments. How much they pay should be based on your salary before you went on maternity leave and if they matched your contributions, that should stay the same. 

How much you pay will be based on your earnings during maternity leave so bear in mind that it may be less than normal.

For partners taking paternity leave, their contributions to their workplace pension will continue unless they choose to stop them. These payments should be based on their paternity pay.

If you’re worried your employer isn’t paying what you’re entitled to

Like most workplace gripes, it’s usually best to speak to your employer first as it may just be an oversight. 

However if you’re still not happy, you can contact your trade union (if you have one), or contact the HM Revenue & Customs Employee Helpline directly on 0300 200 3300. 

Can I top up my pension after maternity leave?

As you are likely to earn less during your maternity leave, your pension contributions will also be lower unless you decide to pay more. If so, you may want to top up your pension when you return to work.

This may be something to consider if you plan to have more children and don’t want your future financial security to be affected by taking time out for your family. You’re allowed to contribute up to £60,000 a year from April 2023, so if you haven’t already used this allowance you can top it up and still get tax relief. 

If you have a few pensions from previous employers and would like to be able to manage them all in one place, PensionBee can help with this. Its technology allows you to combine all of them together and help you get an idea of what you can expect from your retirement.

About PensionBee

For far too long consumers have struggled to manage their retirement savings. Pensions are often complicated, presenting a significant obstacle for savers wanting to take control of their money. In addition, many of us have no idea what we have saved, or how our pension is being managed.

This is where PensionBee can help. Our technology platform is designed to make it easy for customers to combine their old pensions into one diversified online plan, so they can take the first step towards a happy retirement. We’ve created pension calculators and retirement forecasting tools to help our savers plan ahead, so they can build a clearer picture of what they should be contributing to meet their retirement goals. Then, when they reach the age of 55 (57 from 2028), we help our savers to make on-demand withdrawals.

Risk warning: As always with investments, your capital is at risk. The value of your investment can rise or fall, and you could receive back less than you invest. This information should not be considered as financial advice. 

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