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A deep-dive into a variety of pension topics to help you understand and learn more about your pension and the Scheme.
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Maternity, paternity, and adoption leave, as well as part-time working, can ultimately impact your pension contributions and pension benefits you receive. Here’s a straightforward guide to what you need to know.
Maternity pay and leave
You are entitled to statutory maternity pay if you:
You’ll be entitled to 52 weeks statutory maternity leave and receive statutory maternity pay for 39 weeks. For the first six weeks, you’ll get 90% of your average weekly earnings. For the next 33 weeks, you receive 90% of your weekly earnings, or £151.20 a week, whichever is lowest. The remaining 13 weeks are unpaid. These are your statutory rights, but your employer may have a different policy.
Usually, the earliest your paid maternity leave can start is the 11th week before your baby is due. If your baby is born early, your leave starts the day after the birth.
You don’t have to take the 52 weeks you’re entitled to, but you must take at least two weeks off work following the birth.
Paternity leave
Under the same rules as statutory maternity pay, you are entitled to two weeks’ statutory paternity pay. The weekly rate is £184.03 or 90% of your average weekly earnings, whichever is lower.
Adoption leave
If you’re adopting or having a child through surrogacy, you’re usually entitled to paid time off work. This is subject to the same rules and requirements (as above) for maternity pay and the pay structure is identical.
If you’re adopting as a couple, only one person can get adoption leave. The other might be able to get paternity leave or shared parental leave.
Shared parental leave
Alternatively, you and your partner may be able to get shared parental leave and statutory shared parental pay. You can share up to 50 weeks of leave and up to 37 weeks of pay between you.
Your pension during family leave
Your pension Scheme membership will be continuous while you are off, unless you have an agreement with your employer for this to be different. Your pension contributions may change during family leave, because pension contributions are calculated using a percentage of your earnings.
If your pay reduces to nil, then your contributions will stop. Your employer may continue to pay them on your behalf, but you may have to pay these back once you return to work.
While you’re on family leave, your pension benefits won’t be affected (as long as you haven’t opted out and contributions are paid) and your overall benefits will still be based on your final average pay.
For more information, check the family leave guide.
The gender pension gap
The career breaks women take to care for their families’ amount to £39,000 in lost pension savings, according to NOW: Pensions’ 2024 gender pensions gap report. This is because, in many cases, women pause their careers or go part-time to care for their children (this is also known as the ‘motherhood penalty’).
The 2023 Women and Retirement report, produced by Scottish Widows, shows that 44% of UK mothers spend all 5 working days looking after their children (compared to just 16% of fathers). Some women consider having a longer career break, doing part-time work, freelancing or taking on multiple jobs. However, this means that many women might not be earning enough to pay into a private or workplace pension. People in the UK need to earn at least £10,000 a year in order to meet the criteria for pension auto enrolment.
The 2024 gender pensions gap report also shows that women are far more likely to take time out of work to care for an elderly or sick family member.
What is more, the fact that they’ll have worked less years throughout their life could also disqualify them from receiving a State Pension. To get any State Pension, people in the UK are required to have worked for 10 qualifying years. To get the full State Pension, 35 qualifying years of work are required. The 2023 Women and Retirement report also says that often women take around 10-year career gap to shoulder caring responsibilities which poses a real risk of not qualifying for any state pension further down the line. You can check your State Pension forecast on the government’s website.
Working part-time
Many parents, especially mothers, choose to work part-time to balance work and family. While this offers flexibility, it affects your pension.
If your working hours change it’s likely your wages will too. That means how much you pay into your pension may also change. The amount that you pay into your pension is worked out using your full-time rate of Section Pay for your job, but is reduced for the hours you work.
If you go part-time then you’re still entitled to the same range of benefits as your full-time colleagues. However, the amount you pay in and the amount you receive will be based on the part-time hours you work. You can find out more in the guide to part-time work.
The gender pay gap
The gender pay gap – the difference between the earnings of men and women – is deemed one of the major drivers of the pension gap. Women have been earning (and still earn) less than men on average, although 2023 figures show a narrowing of this gap over time. In April 2023, women earned an average of 7.7% less than men per hour according to the ONS.
The significant gap in income means women have less capacity to meet increasing financial demands. The 2023 Women and Retirement report, by Scottish Widows suggests that on average, women are paid 15% less per hour across all jobs in the UK. The report also highlights that only 59% of women aged 22-65 are saving into a private pension, compared to 71% of men, while 62% of men are also expecting to be able to draw from other long-term savings sources in retirement, compared to just 50% of women.
It’s not all doom and gloom for women, though. The 2024 pension gap report shows a positive tendency of more women undertaking higher education, and therefore entering the workforce with higher salaries. If the trend continues, the gender pay gap is likely to reduce further over the coming years, as more young women go on higher education. This could mean better retirement outcomes too.
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