Going on family leave can mean you need to make many decisions about finances and how best to make everything work for you. It’s important to know that while you’re off and in receipt of maternity pay, you’ll continue to build up pension based on your pre-maternity leave rate of earnings.

As well as continuing to build up your pension benefits, you also remain entitled to the in-service insurance benefits provided by the Scheme. To find out more about the benefits of staying in the Scheme while on family leave take a look at our case study below.

Example case

Jennie has been on maternity leave for 18 weeks, and will now only receive statutory maternity pay for a further 21 weeks if she chooses to take additional maternity leave. As Jennie’s usual pensionable earnings are £30,000 per year her contribution rate is 8.6%, and this is the rate that will apply to her statutory maternity pay of £145.18 per week for the further 21 weeks. Usually Jennie would have paid pension contributions of £1,041 over a 21 week period and have added £213 to her annual pension, but as she’s receiving statutory maternity pay she’ll pay pension contributions of £262 over the 21 weeks but still accrue £213 of annual pension.

As long as she’s being paid and contributing towards her pension, Jennie will continue to be treated as being ‘in service‘ and this means a death grant will be based on her usual full-time equivalent salary prior to going on family leave, even if she reaches the point where half pay/statutory pay is exhausted.

All this applies, provided you don’t opt out of the Scheme. These are valuable benefits, yet some members going on family leave are choosing to opt out and lose out on pension accrual and life cover.

If you’re going on maternity leave or other family leave and you’re thinking of opting out, think twice before you do. Please seek independent financial advice before making any decisions.