Your employer should automatically keep up your workplace pension contributions while you’re on maternity leave. Good news if you have your hands full with a new baby. But what else do you need to think about now to make sure you can fund the lifestyle you want in retirement?
Pension contributions while you’re on maternity leave
If you’re in a workplace pension scheme and your employer contributes to it, they must continue to do so while you’re receiving Statutory Maternity Pay.
That’s up to 39 weeks, and, possibly longer if your employer offers it in your contract.
Check with your employer that your pension contributions are being paid while you’re on maternity leave.
Read more information about your workplace pension during maternity leave in our guide Maternity and paternity leave and your pension
Are you worried that your employer isn’t paying what you’re entitled to?
As with most workplace niggles, it’s usually best to talk to your employer first. It might just be an oversight.
But if you’re still not happy, contact your trade union (if you have one), or call our Pension Wise helpline on 0800 011 3797.
You can also contact the HM Revenue & Customs Employee Helpline directly on 0300 200 3300.
Getting money paid into your pension scheme when you’re on maternity leave is all very well, but it doesn’t last forever.
What you decide to do next could have a major impact on your pension and affect your income when you retire.
Need more information on pensions?
Call us free on 0800 011 3797 or use our webchatOpens in a new window. One of our pension specialists will be happy to answer your questions.
Our help is impartial and free to use, whether that’s online or over the phone.
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So, you will want to carefully consider your options.
Option one – go back to work full time
Pros
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You won’t have any gaps in your pension contributions, and you can continue paying in the same as before and you benefit from your employer contributions (if they make them).
Cons
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Possible childcare costs
Option two – return part time or on reduced hours
Pros
-
You can continue to pay into your workplace pension scheme.
Cons
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If you and your employer pay in less, your eventual pension will be less.
Option three – get a different job or go self-employed
Pros
-
Possible flexible working hours or more time at home.
Cons
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Pension arrangements with a new employer might not be so favourable, and if you go self-employed, you’ll have to arrange a personal pension yourself (with no employer’s contributions at all).
Option four – give up work completely while your baby is small
Pros
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Time at home to enjoy parenthood.
Cons
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You’ll have to leave any employer’s pension scheme, so your pension entitlement or pot won’t get any bigger – although you’ll still get it when you retire.
Ways to make sure you don’t miss out
Top tip
It makes sense to plan to have some pension savings in your own name. If your family arrangements change, you’ll still have something put by for your retirement.
It’s always worth joining a workplace pension, especially if your employer also pays into the scheme on your behalf.
But, if your employer doesn’t have one, or if you’re self-employed or don’t work at all, you’ll need to make other arrangements.
Get yourself a personal pension
If there is no workplace pension available, if you’re self-employed, or if you don’t go back to work, you should start your own pension and regularly pay into it.
The tax relief on pension savings is generous (and tax relief just means you effectively get a contribution from the government).
If you are not earning enough to pay Income Tax, you can still receive tax relief on pension contributions up to a maximum of £3,600 a year or 100% of earnings, whichever is greater, subject to your annual allowance.
For example if you have no income you can pay in £2,880 and the government will top up your contribution to make it £3,600.
Another person, like your partner, could also pay into your pension for you.
Go back to work after your youngest child’s 12th birthday
That’s when the government stops giving you National Insurance credits towards your Basic State Pension and Additional Pension, so you’ll need to be earning again if you want to boost what you get in retirement.
Get advice
Pensions are complicated. Your best bet is usually to speak to a financial adviser before you do anything.
