Local Government Pension Scheme in England and Wales - Access and Fairness
Pension Contributions During Child-Related Leave
In the LGPS, when a member is on child-related leave it is still pensionable and contributions must be paid, on any pensionable pay received as per Regulation 12 of the 2013 LGPS Regulations. Child-related leave includes:
- Ordinary adoption or maternity leave;
- Additional adoption or maternity leave during which the member receives some pensionable pay;
- Neonatal care leave during which the member receives some pensionable pay
- Paternity leave;
- Shared parental leave during which the member receives some pensionable pay; or
- Parental bereavement leave during which the member receives some pensionable pay.
One of the most significant gaps in a woman’s pensionable service is often maternity or adoption leave. In the LGPS, a woman who takes the full 52 weeks that she is entitled to under statutory maternity leave, will take 26 weeks of ordinary maternity leave (pensionable), 13 weeks of additional maternity leave where some pensionable pay is received (pensionable for those who receive pensionable pay during this period) and 13 weeks of additional maternity leave where no pensionable pay is received (not pensionable).
The government proposes to make additional maternity leave, additional adoption leave and shared parental leave during which no pay is received automatically pensionable, with the cost to be met by the employer.
This would be achieved by amending the definition of “child-related leave” in the 2013 Regulations to include additional maternity leave, additional adoption leave and shared parental leave during which the member receives no pay. This would have the effect of all additional maternity or adoption leave and shared parental leave being fully pensionable, with no contributions payable by the employee for any leave that is unpaid. Where the member is not entitled to any pay during additional maternity/adoption leave, this proposal means an additional 26 weeks will be automatically pensionable.
The government recognises that this proposal is a significant improvement in terms for women who take the full year of statutory maternity leave, and both men and women who take up adoption leave. It should also encourage take up of shared parental leave.
The government is mindful that this would be a new requirement for LGPS employers, to increase support for employees during maternity, adoption or shared parental leave. The government believes that the cost would be affordable, both at the individual level (as in most cases it is time-limited to only 13 weeks of accrual) and at the fund-wide level (as the overall number of members who would take the full year of child-related leave in each valuation period is likely to be relatively small in the context of the entire fund). GAD has estimated this proposal might cost the scheme under £1 million in increased contributions per year, although we do not have data on the number of members who do not receive pensionable pay during the first 13 weeks of additional maternity, adoption or shared parental leave.