When someone is on parental leave, pension contributions often continue, but the amounts can change depending on the type of pay they receive and how the pension is set up.
Get the most out of Bob
- Keep pension contributions compliant during parental leave by applying the correct employee and employer contribution rules.
- Reduce manual follow-up by setting a contribution amount and duration that automatically applies for the relevant leave period.
- Support salary sacrifice scenarios where employee pension contributions cannot be deducted from statutory pay.
Before you begin
- Decide whether your organisation maintains employer contributions, employee contributions, or both during parental leave.
- Check whether the employee is enrolled in a salary sacrifice pension scheme, or a net pay arrangement/relief at source scheme.
- To learn more about parental leave in UK Payroll, see Set up parental pay and leave.
How to configure pension contributions during parental leave
- In UK Payroll, navigate to Employees.
- Open the relevant employee.
- Go to the employee’s Parental leave tab.
- In the Pension contributions section, choose how contributions should be handled:
- Employer pension contributions: Enter the employer contribution amount you want to maintain during the leave.
- Period to maintain contribution: Select how long to maintain contributions (for example, for the statutory pay period or another defined period).
- If applicable, select Maintain employee pension contributions to continue paying the employee’s pension contributions on the employee’s behalf. This is most commonly required for employees on salary sacrifice pension schemes.
- If you want pension contributions to be calculated based on statutory parental pay, select Include SMP/SPP in pension calculations.
- Save your changes.
Example
Employees on SMP
- If the employee is receiving Statutory Maternity Pay (SMP), employee contributions are typically calculated on the actual pay received during leave (which may reduce the employee contribution amount).
- Employer contributions typically continue based on the employee’s normal pre-leave salary (rather than the reduced SMP amount), depending on your organisation’s policy.
Example
Salary sacrifice pension during parental leave
If the employee is enrolled in a salary sacrifice pension scheme and is receiving statutory pay only:
- Salary sacrifice contributions are not taken as a deduction from statutory pay.
- You may need to use Maintain employee pension contributions so the employer covers the full pension contribution (including the employee portion), according to your policy.
FAQs
Can pension contributions be deducted from SMP or SPP?
In many cases, pension contributions can be deducted from statutory payments under a net pay arrangement or relief at source, because they are treated as authorised deductions.
Why can’t salary sacrifice pension contributions be taken from statutory parental pay?
Salary sacrifice changes the employee’s contractual salary. Statutory payments are set by law and cannot be contractually reduced, so salary sacrifice deductions cannot be taken from statutory parental pay.
Do employer pension contributions have to continue during parental leave?
In many cases, employer contributions continue while an employee receives statutory pay, and the calculation is typically based on the employee’s normal pre-leave salary. Your organisation’s policy may provide enhanced support.