How parental leave affects your NHS Pension

Specialist financial advisor Phil Bowler explains what happens to your NHS Pension when you go on maternity, paternity or adoption leave, and when you return to work

If you’re at the stage in life where you’re ready to start or expand your family, it’s important to understand how this will affect your NHS Pension, and the implications for your retirement years, no matter how distant those might seem.

Maternity, paternity or adoption leave starts when the individual chooses. Partnership deeds usually stipulate that advance warning of one month is given. Deeds usually permit a minimum of 13 weeks’ leave. By way of comparison, the statutory maternity leave duration for employees is up to 52 weeks, of which two weeks are compulsory, with statutory maternity pay entitlement for 39 weeks.

Where a GP partner is going on maternity, paternity or adoption leave, the remaining partners should approve the locum covering the leave. The absent partner is entitled to their full profit share during the leave.

When a salaried GP or GP partner is absent from the practice due to a period of parental leave the practice is eligible to receive funding towards the cost of cover for that GP. Cover for the absent GP can be provided by either an external locum or another GP already employed within the practice, provided that individual is not already working full time.

Do I stop contributing?

Going on maternity, paternity or adoption leave doesn’t mean as a GP partner you are no longer a member of the NHS Pension Scheme. Whilst on leave, you’ll remain a member of the scheme and will still be able to contribute to your pension. If you have told your partners that you’ll be continuing to work after your leave then both you and your practice will continue to contribute to the NHS Pension Scheme for the period of your leave.

The exception is if you are working as a locum, as locums are only able to contribute to the scheme whilst they are actually working.

Can I join the scheme while on leave?

It’s important to remember that you can’t join the scheme whilst on maternity, paternity or adoption leave. This includes those who have previously opted out of the scheme for whatever reason in the past. If you’re not a member of the NHS Pension Scheme, and will be going on maternity, paternity or adoption leave soon, then make sure you know of the many benefits associated with being a member of the NHS Pension Scheme.

How will my contributions be affected?

The contributions made by you to your NHS pension during periods of leave will be determined by the amount of pensionable pay you will receive during your leave. This will depend on your eligibility to receive occupational maternity, paternity or adoption pay from the NHS, as well as your entitlement to statutory pay. Your employer can provide you with further information.

• If you receive full pay: Contributions are based on your pensionable pay received

• If you receive half pay: Contributions are based on your reduced pensionable pay received

• If you receive statutory pay: Contributions are based on the amount of statutory pay you receive

• Unpaid leave: Contributions continue to be payable based on the pensionable pay received immediately before any unpaid leave begins

In all cases, you will continue to pay the same percentage contribution as applied immediately before your period of maternity, paternity or adoption leave.

You should note, in the case of the employer’s contributions to the NHS pension, these will be based on actual pensionable pay before any reduction.

How will it affect my pension?

As your pension contributions are reduced during the period of half pay, statutory pay or unpaid leave, this could have an impact on the future value of your NHS pension and, therefore, on your income in retirement. Where there is an impact, in most cases, it’s not likely to be significant. That said, and depending on your own personal situation, perhaps you’ve had more than one period of absence, you may well decide to offset any impact, for instance, paying more into your NHS Pension.

What if I go back back part-time?

After your leave is over and you return to work, if you don’t go back on a full-time basis then your reduced working hours will mean less pensionable pay. As a result, your pension contributions, the value of your pension benefits, and benefit accrual will be reduced, which will have an impact on your final retirement income as well as the benefits your family would receive should the worst happen and you pass away or have a serious illness. However, good financial planning can help to prepare you for less than full-time working through careful consideration of the all-round issues.

The NHS Pension Scheme offers an excellent range of benefits if something serious happens to you. This includes a death in service benefit, which provides your loved ones with a lump sum that equates to twice your pensionable pay and is paid immediately upon death; a short-term pension, which is the equivalent of six months’ full pensionable pay on death; and a dependant’s pension, which starts when the short-term pension ends and is reliant on two years’ continuous service, depending on the scheme you’re in. More information on these benefits can be found on the NHS Pensions Website.

Phil Bowler is Business Development Manager at Chase de Vere