Salary sacrifice pension deductions during maternity leave on half pay

[Millie654]

Hi all, I'm looking for some advice / other people's experiences regarding a salary sacrifice pension during maternity leave please.

In relation to enchanced maternity pay, I get:
X weeks full pay
X weeks half pay
Remainder statutory pay
Last 3 months zero pay

Pre-maternity leave, I contributed 10% of my salary and my employer contributed 6% into a salary sacrifice pension.

Whilst I am on half pay, I noticed my employer has been deducting 10% pension contribution based on my full salary amount, not the half pay - so essentially I'm paying 20% of my current income into the pension. I queried it and they said I need to continue to pay 10% contributions based on my contractual salary, not actual pay.

I understand that, under salary sacrifice rules, my employer has to maintain the same payments as before i.e. 16% total of my contractual salary. But can they expect me to pay 20% of my monthly pay instead of the usual 10% whilst on half pay?

FYI the deductions don't take me under the national living wage, if that makes a difference.

Thank you in advance!

It looks as if your employer might be wrong.

www.citizensadvice.org.uk/work/maternity-and-parental-rights/check-your-maternity-and-parental-rights/rights-while-pregnant-or-on-maternity-leave/rights-while-youre-on-maternity-leave/

Your employer needs to maintain their part, but not yours too. We would process 10% of your SMP in my workplace.

If you can afford it, in the long term you’ll almost certainly be better off under your current situation. Dropping pension contributions during maternity is a big part of the gender pension gap. Is the baby’s dad dropping his pension contributions too so you have more money as a household?

I’ve literally just thrown away all the workings from my mat leave but I am pretty sure that the first poster is right. You pay 10% of whatever your new earning are and they should be topping up.

actually I might be remembering this wrong. You might need to pay the same £ value now if you can afford it but if the 10% of your normal contribution is more than you earn on smp then they will top it up then

Sorry for the spam it was bugging me so I looked it up - what I said first was right assuming you are in a dc scheme at a private employer ie not public sector as that might be different. Assuming that’s correct they should be topping up the difference between 10% your current earnings to 10% your full earnings. Same is true whilst on smp but not zero pay.

Im currently putting a big contribution into my pension. When I went on mat leave after my enhanced benefit period work kept on paying in at my usual rate even though I was just on the maternity allowance.
It was an unexpected benefit and one they keep quite quiet.

If your pension contributions are deducted under a salary sacrifice arrangement, these are treated as employer contributions. During periods of maternity leave, your employer should continue to pay the entire contribution.

Holy moly some incorrect posts here. I’m a HR and payroll professional.

if your pension is via salary sacrifice then your employer needs to continue contributing the full 16% for your paid maternity period (the first 39 weeks) without making any deduction from your statutory maternity pay. if you are paid above SMP rates (ie. enhanced company maternity pay) then they can make a deduction, but nothing that would take you below. This is one of the reasons some employers have maximum contributions for salary sacrifice - because they are liable to continue paying it when you are on any sort of statutory pay, including SSP, adoption, paternity etc.

for other posters, salary sacrifice/exchange is treated differently to net pay pension deductions. For net pay, your employer needs to continue paying based on your usual salary but your employee contribution is based on actual earnings.

feel free to DM me if you have any other questions.

Thank you everyone :-)

@PensionQ22 this is what I had read online - that they have to maintain my contributions because it's salary sacrifice, but I wasnt sure if they are allowed to deduct 20% whilst I'm on half pay or whether they can only take 10% of the pay received. From what you say, it sounds like they can take this so long as the leftover amount is more than statutoty mat pay (which it is) - therefore their policy seems to be legal .. but stingy! I would have expected the fairest way to do it would be to deduct 10% of my pay received, then top up the rest themselves.

It's very annoying because the whole idea is that women won't be disadvantaged whilst on mat leave, yet having to pay 20% of my pay is a disadvantage compared to people not on mat leave. It feels like they're using a loophole to reduce their own liability.

To another poster who asked - my partner is on a lower wage than me and already only contributes 4% to his pension (his choice)! Anyway, I will continue to pay the full amount to maintain my pension - by posting this, I was just hoping to get confirmation that my employer needs to top up the amounts instead of me 🙂

Many years ago my former employer tried to encourage me to stop my salary sacrifice for childcare vouchers stating that it would impact my wages for the 90% for the first 6 weeks. I declined as needed them for my eldest daughter. Turns out real reason was so they didn’t have to pay for them whilst I was off

It’s a bit of a crap policy, as you’ve mentioned, but allowed. In the past when I’ve processed payroll we deducted the % based on actual earnings and then topped up but it is the company’s choice.

you could still presumably opt out while on mat leave if it leaves you too short to pay bills.

At my place your contributions would stay at 10% (of the lower pay amount) while you're above SMP and employer contribution would top up to maintain the 16% of usual amount. While you're on SMP they're paying the whole amount. And unpaid period all contributions stop.