"Nobody cares how much you know, until they know how much you care."
For anyone at work about to become a parent, “workplace pension” surely isn’t the first thought to spring to mind. It’s unlikely it would even be the second or third, but if you or your children are soon to become a parent, parental leave will follow and you’ll need to know how it affects pension entitlement. Did you even know it does?
It should be easy enough to find out the impact, if any. Employment Law has specified the pension rights of those on parental leave for years…but now Automatic Enrolment (AE) has been enforced there is a little more explaining to do.
Automatic Enrolment & Parental Leave
The impact parental leave will have on AE depends on several factors:
- Has your employer gone through “staging”?
- Are you a member of a qualifying workplace pension scheme (QWPS) or AE scheme?
- Are you already on parental leave?
All companies with at least one employee have been assigned a staging date by The Pensions Regulator, from which they must meet the requirements of AE and enrol all eligible jobholders into a QWPS, if they are not already members of one. An organisation can postpone its staging date by up to three months in which case, enrolment will occur on the scheme deferral date.
Qualifying Workplace Pension Scheme (QWPS)
A QWPS must meet statutory minimum criteria and if you are a member of a QWPS then you do not have to be automatically enrolled into an AE scheme. If you are unsure whether you are a member of a QWPS, speak to us or your employer.
Am I affected?
This depends on whether or not you are on parental leave on your employer’s staging date, or on the subsequent re-enrolment date which is covered later in this article.
To see how parental leave can affect you, select below whichever is most appropriate to your circumstances.
Back to work
On your return to work you may be able to make extra contributions to your plan, depending on your scheme rules. This may appeal to you if you wish to compensate for any drop in pension contributions during your leave due to receiving statutory or occupational parental pay at a lower rate than your usual earnings.
...is the very thing that prompted this article. A member of the Courtiers team asked me how their wife would be impacted by re-enrolment as her company was potentially going through the process during her maternity leave.
Take time to consider the impact of parental leave on your workplace pension. Understanding its effects now will allow you to plan and prepare for the future and not only will this be a positive thing for yourself, but for your family and children too.
The information provided in this article is based on our understanding of current legislation which is subject to change.
Vanessa Clayton BA DipFA
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