Pensions During Maternity, Paternity, and Adoption Leave

Maternity, paternity, and adoption leave create a significant gap in normal working life — and pension accrual is one of the most easily overlooked aspects of that gap. The good news is that UK law provides strong protections for pension rights during statutory leave. The detail of how those protections work, and where the gaps lie, requires careful attention from employers and employees alike.

Legal Framework: The Equality Act and Maternity Leave Regulations

Under the Maternity and Parental Leave Regulations 1999 and the Equality Act 2010, an employee on statutory maternity leave is entitled to the benefit of her employer's pension contributions for the entire duration of her leave — both ordinary maternity leave (the first 26 weeks) and additional maternity leave (the subsequent 26 weeks, up to a total of 52 weeks).

This is a statutory right that cannot be contracted away. Even if the employer's pension scheme has different rules for contribution rates or eligibility, the maternity leave protections override those rules for the period of absence.

Employer Contributions During Paid Maternity Leave

During any period of paid maternity leave — whether that pay comes from Statutory Maternity Pay (SMP), contractual maternity pay, or a combination — the employer must continue to make pension contributions at the same rate as if the employee were working normally.

Pensionable pay during paid leave: The employer contribution during paid maternity leave is based on the employee's normal contractual remuneration, not the reduced SMP rate being received. This is a critical and frequently misunderstood rule. If the employer's pension contribution is 5% of salary and the employee normally earns £60,000, the employer must continue contributing £3,000 per year (£250 per month) to the pension throughout paid leave — even though the employee is receiving only the standard SMP rate of £194.32 per week (2026–27 rate) after the first six weeks (the first six weeks are paid at 90% of normal weekly earnings).

Some employers have more generous contractual maternity pay (e.g., full salary for 16 weeks). During those periods of enhanced pay, the employer pension contribution is typically calculated on the enhanced pay under the scheme rules. The key point is that employer contributions during any paid leave period are calculated on normal salary, not SMP.

Employee Contributions During Paid Maternity Leave

Employee contributions during paid maternity leave are normally calculated on actual pay received — i.e., on SMP or contractual maternity pay actually in payment, not on normal salary. This means employee contributions naturally reduce during the SMP period because the base pay is lower.

Under defined contribution and group personal pension arrangements, if the employee's pay falls to SMP level, their employee contribution (as a percentage) will produce a much smaller absolute amount. This creates an asymmetry: the employer continues contributing at normal salary level; the employee contributes on the lower actual pay.

Scheme rules may be more generous. Some schemes (particularly large employer schemes and public sector schemes) calculate both employer and employee contributions on normal salary throughout paid leave. Check the scheme booklet or HR policies.

Unpaid Maternity Leave and Pension Obligations

The picture changes materially during unpaid maternity leave. If an employee opts to take additional maternity leave (up to 52 weeks total) and has exhausted all paid leave, her pay drops to zero.

Employer contributions during unpaid leave: The employer's obligation to continue pension contributions during unpaid maternity leave depends on the type of pension scheme.

For defined benefit occupational schemes: The employer must continue accrual for the employee during unpaid leave. The employee is treated as if she were working normally, and the employer bears the cost.

For defined contribution and group personal pension schemes: The legal position is more nuanced. The employer is required to continue contributions only if the employee also contributes. If the employee cannot afford to contribute on zero pay and therefore suspends her employee contributions, the employer is generally not required to contribute either during unpaid leave. This can create a pension gap for lower-paid workers who cannot fund contributions from savings during unpaid leave.

Practical implication: Employees planning to take the full 52 weeks should consider whether they can fund employee contributions (even at a minimum level) during the unpaid period to preserve employer contributions. Alternatively, some employers choose to continue contributions voluntarily as an employee retention measure.

Statutory Maternity Pay and Pensionable Pay

Statutory Maternity Pay (SMP) is not automatically pensionable pay under occupational pension scheme rules unless the scheme specifically provides for it. In many schemes, "pensionable pay" is defined as contractual earnings or basic salary, and SMP is not technically within that definition.

Where SMP is not pensionable pay, it follows that the employer is not required to calculate employee or employer contributions on SMP during the paid period — instead, the employer must contribute based on the normal salary that would have been paid but for the maternity absence. The net result is similar, but the mechanism differs.

Enhanced maternity pay: Where an employer pays contractual maternity pay above SMP — often 50%, 75%, or full salary for a set period — those enhanced payments are typically pensionable pay under the scheme's own rules, and contributions flow on that enhanced pay level. This is a genuine benefit of working for an employer with a good maternity policy.

Paternity Leave and Adoption Leave: The Same Principles Apply

Statutory Paternity Leave (one or two weeks, capped at SPP of £194.32 per week in 2026–27) follows equivalent rules to SMP for pension purposes. The employer must continue pension contributions based on normal salary during the paid SPP period. Employee contributions reduce to reflect actual lower pay received.

Adoption leave mirrors maternity leave. Adopters (including both joint adopters where applicable) are entitled to equivalent pension protection during adoption leave periods, with the same distinction between paid and unpaid leave.

Shared Parental Leave (SPL) also provides pension continuation rights during the paid periods. Both parents sharing parental leave are entitled to pension contributions during paid SPL at normal salary rates.

Auto-Enrolment Rules During Leave

Auto-enrolment obligations continue during all forms of statutory leave. Employers cannot opt employees out of their workplace pension scheme because of maternity, paternity, or adoption leave. Existing enrolled employees remain enrolled. Employees who opt out before leave are not affected, but opting out is voluntary and cannot be encouraged by the employer.

There is no auto-enrolment exception for the period of unpaid maternity leave. The employee remains eligible for auto-enrolment, and if she is already enrolled, she stays enrolled. The financial mechanics during unpaid leave (employer not required to contribute unless employee also contributes for DC schemes) operate within the enrolment framework.

Returning to Work: Catching Up on Pension

After maternity leave, returning employees often ask whether they can make additional contributions to compensate for any gap in pension saving during leave. The answer is yes, subject to annual allowance limits:

Lump sum contributions: On return to work, an individual can make additional personal contributions (up to 100% of earnings) and receive full tax relief, subject to the standard annual allowance (£60,000 in 2026–27). If they have unused carry-forward from the previous three years, this can be used to make larger contributions.

Salary sacrifice enhancement on return: Some employees agree with their employer to temporarily increase salary sacrifice pension contributions on return to work, effectively "catching up" while the employee is in a higher earning period. This also generates employer NIC savings that can sometimes be shared with the employee's pension.

DB scheme additional years: Members of defined benefit schemes may be able to purchase added years or additional pension to compensate for any reduced accrual during leave. Rates for purchasing added years are scheme-specific and should be reviewed before the catch-up window closes.

Employer NIC and Pension During Leave

During periods of paid SMP, employer National Insurance Contributions (NICs) still apply to any earnings above the secondary threshold (£96 per week in 2026–27). SMP itself that is below contractual enhanced pay is in a specific NIC position. Employer pension contributions continue to be employer NIC-exempt regardless of the leave period, which is consistent with the general NIC treatment of employer pension contributions.

Employers can reclaim SMP costs (and often the employer NIC on SMP) through HMRC's payroll reclaim mechanism. Most employers reclaim 92% of SMP; small employers (NIC liability under £45,000 per year) can reclaim 103% to cover their additional NIC cost. Pension contributions during maternity leave are not separately recoverable from HMRC — they form part of the employer's ongoing obligations.

Planning Considerations for High Earners

For higher-earning employees, the salary during maternity leave remains the basis for employer pension contributions. A senior professional earning £120,000 whose employer contributes 10% of salary will have £12,000 of employer pension contributions made during paid leave, even while receiving only SMP. This is a significant retained benefit that is easy to overlook when weighing up how long to take maternity leave.

For senior employees using salary sacrifice arrangements, the salary sacrifice is typically suspended during the SMP period (as there is no salary to sacrifice), but contractual employer contributions must still be paid. Review your employment contract and pension scheme rules with HR before leave begins.

How Global Investments Can Help

Global Investments advises high-earning professionals and business owners on pension planning across major life events, including maternity, adoption, and parental leave. For those in senior roles or complex employment arrangements, ensuring pension rights are fully preserved and contributions correctly maintained during leave is an important element of lifetime pension planning. We can review your arrangements, advise on catch-up contributions on return to work, and help model the long-term impact of leave periods on your retirement income. Contact our team to discuss your circumstances.

This guide is for information only and does not constitute financial, legal, or tax advice. Employment and pension legislation can change. Always seek regulated advice tailored to your circumstances.