Thousands of Women Risk Missing Pension Contributions Due to Employer Errors During Maternity Leave
By Megan Harwood-Baynes, Cost of Living Specialist
Thousands of women across the UK may be missing out on significant sums in their pension funds due to a prevalent error by employers during maternity leave. This alarming revelation, uncovered by advocacy group Nugget Savings and shared exclusively with Smart Money Mindset, indicates that many women are not receiving the correct pension contributions while on leave, a situation that could have far-reaching implications for their financial security in retirement.
Understanding the Employer’s Responsibility
Under current regulations, employers are required to continue making pension contributions based on a woman’s full salary for the duration of her maternity leave. However, numerous women reported that their employers have mistakenly adjusted contributions to align with their reduced maternity pay instead. These discrepancies can accumulate to substantial amounts, with affected women reporting losses ranging anywhere from several hundred pounds to as much as £4,000 in their pension accounts.
According to a recent survey conducted by Nugget Savings, which questioned 236 women about their pension contributions during maternity leave, it was found that over 100 participants experienced discrepancies in their contributions. While some women successfully reclaimed their lost funds after addressing the issue with their HR departments, many others have not had that fortune.
The Scale of the Problem
Katie Guild, co-founder of Nugget Savings, expressed concern that the issue might extend far beyond the surveyed women. “We’re concerned we have just scratched the surface of this issue,” she stated. Guild pointed out that errors in pension contributions could date back to the introduction of auto-enrollment in 2012, potentially impacting millions of women.
With each year, over half a million women take maternity leave in the UK, and even a minor pension mis-payment can deprive them of compound interest accrual over the years. This problem exacerbates the existing gender pension gap, with statistics indicating that women, on average, retire with pension pots 55% smaller than those of their male counterparts.
Encountering Resistance in Correction Efforts
Many women who sought to rectify the issue reported facing challenges. Some received pushback from their employers, who claimed too much time had elapsed to correct the stated errors or maintained that their contributions were accurate. One anonymous mother shared her experience of recovering ÂŁ4,000 after notifying her employer but noted the lack of an apology or explanation regarding the oversight.
Another mother, Chloe, recounted how she identified a payment shortfall of £717.22 during her maternity leave. After bringing it to her employer’s attention, she received repayment, but no apology was offered. Meanwhile, Sam, another affected mother, had to engage her union to facilitate the recovery of £1,400, which she successfully achieved but only after pushing back against her employer’s original low interest repayment offer.
The Road Ahead for Affected Women
In an effort to assist women in identifying whether they have been affected, Nugget Savings urges individuals to verify their contributions. Women are advised to check their workplace pension provider’s online portal or their annual statement for discrepancies, comparing employer contributions before and after maternity leave.
When queried about the issue, Catherine Nicholson, interim director of automatic enrolment at the Pension Regulator, confirmed that some employers have been making recurring errors related to calculating contributions for staff on maternity leave. The regulator stated that it has recovered more than ÂŁ700 million in missing contributions since 2012; however, specific figures related to maternity leave issues were not available.
The Pension Ombudsman further clarified that while they haven’t seen a rise in complaints on this matter, they emphasize the importance of employers adhering to proper procedures for handling disputes.
Conclusion: A Call for Greater Clarity and Awareness
Given the complexity of pension regulations and the challenges women face while managing finances during maternity leave, many affected may not even be aware they are missing out on contributions. Nugget Savings co-founder Harriet Morton-Liddle emphasized the need for clearer guidance, noting that the organization struggled to obtain definitive answers from financial authorities regarding the correct procedures for employers and employees.
With rising awareness of this concern, it is crucial for women to become proactive in reviewing their pension contributions to ensure they receive what is rightfully theirs.
If you believe you may have been affected by discrepancies in pension contributions during maternity leave, it is recommended to reach out to your HR department and your workplace pension provider. For further assistance, please contact the Pension Ombudsman or explore the Internal Dispute Resolution Process offered by your pension scheme.
Have you encountered similar issues or found discrepancies in your pension payments during maternity leave? We encourage readers to share their experiences at [email protected].
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