How will maternity or parental leave affect my pension?

All pregnant employees are entitled to maternity leave. Your contract of employment may give a longer period than the legal minimums as of right. In a 'money purchase' scheme, your employer should continue to pay the same contributions (i.e. based on your normal pay), but if you only pay reduced contributions based on your maternity pay, then inevitably your pension fund will be a little smaller.

If you take a period of unpaid leave, neither you nor your employer will be expected to contribute – you may choose to go on contributing, but your employer won’t have to (unless your contract says otherwise).

If you are a member of a salary-related scheme, you should build up your pension as normal while you are on paid maternity leave, only paying contributions calculated on the maternity pay you receive from your employer.

If any calculations need to be done about your salary for pension purposes while you are on maternity leave (if, for example, you resign), your salary would be taken as if you were still at work normally. Your length of service in the scheme will not be affected. You will be treated as if you were at work during your maternity leave.

If you take unpaid maternity or parental leave, while the time before and after must be counted as continual service, neither you nor your employer will pay into your pension and your parental leave need not be counted when your length of service is used to work out your pension. Of course, many employers will be more generous than this.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.