Pensions auto enrolment is high on the agenda of most employers right now.
A new and revolutionary way of making sure that UK employers and employees take at least some responsibility for their retirement planning, the good news is that the majority of employers you have staged have come out of the other end of auto enrolment unscathed. However, some employers are coming up against new and challenging questions about how auto employment impacts on them and their employees regularly and would welcome some assistance.
One question is whether or not pensions auto enrolment continues to apply to expectant mothers on maternity leave?
In other words, is a woman eligible for auto enrolment if her employer’s staging date takes place either just before she goes on maternity leave or when she is already on maternity leave? The simple answer to this is “yes”, an expectant mother should be treated like any other employee when it comes to automatic enrolment.
No matter whether your employee is about to go on maternity leave or has already left for her happy event, you must assess her for eligibility in the same way as you would any other employee. In both cases you need to first make sure she falls into the relevant age group i.e. is aged between 22 years of age and state retirement age. Once you have confirmed that she falls into this group, you should then work out whether or not she qualifies from an earnings point of view.
The reference for income eligibility is an employee’s full income and in the case of an employee on maternity leave, this will be her Statutory Maternity Pay (SMP). If the SMP for the reference period (one calendar month) reaches or exceeds the earnings trigger point for auto enrolment and she falls within the age category, then she will need to be enrolled like any other employee.
In the case of an employee who is already enrolled in your pension scheme and subsequently avails of maternity leave, the employee would qualify for contributions on their pay up to the point where they went on maternity leave and during maternity leave at their pensionable pay level. During maternity leave the required payment from the employee’s point of view is determined by the actual maternity pay they receive. In other words, the employee has the choice to reduce their payments to the lower level or retain the contributions at the level of their full pensionable pay during their leave period.
Irrespective of whether or not an employee is receiving maternity pay, employers are required to make contributions for the full 26-week ordinary maternity leave period. If mothers decide to extend their leave, if they don’t qualify for SMP or any other contractual income, the employer can cease their contributions. However, if the employee is entitled to SMP only up to week 39 the contributions must continue and until occupational pay stops if it is after week 39.
Establishing how employer auto enrolment responsibilities are affected during maternity leave can be complicated and if you’re in any doubt, it’s always best to seek advice to make sure you do the right thing for you and your employee.
If you’d like help; we’re here for you. All you need to do is get in touch and one of our team will endeavour to help you.