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Employers AEPension Contributions for SMP employee

Employers AE Pension Contributions for SMP employee

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I have an employee who has started maternity leave this month.  I understand that under Auto Enrolment, the employer must contribute an amount based on the normal amount of pay received rather than the SMP. 

The concern I have is that this employee receives a basic monthly pay and a variable bonus.  I have telephoned the pension regulator who cannot answer my query.  They say that if contributions are based on Qualifying earnings, being a closed list, bonuses have to be included when paid normally.  But suggested I speak to an employment law specialist for a definitive answer regarding this when an employee is on SMP.

Has anyone looked into this, as my line of thought is to look at the last 3 months bonus and average them out and combine with the normal basic pay to achieve a figure to base the employers contributions on whilst the employee is on SMP.  I really feel TPR should have a definitive answer to legislation they bring in but could not give me one.

Many thanks in advance.

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By Wanderer
26th Jun 2018 17:52

Looks like nobody seems to know:-

"Moneysoft has sought advice from HMRC, The Pensions Advisory Service, The Pensions Regulator and various pension providers on how to calculate the correct level of employer contributions in cases where an employee’s earnings were variable before commencing their leave, none of whom have been able to provide a definitive answer. For this reason it is not possible for Payroll Manager to automatically calculate employer pension contributions during periods of parenting leave, and this is something that must be done manually by the user. You should contact your pension provider for advice, who have a legal obligation to ensure that the correct level of employer contributions are being made during periods of parental leave."

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Replying to Wanderer:
By Carolynne
26th Jun 2018 18:23

Glad I am not the only one who doesn't know then.

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By Kate Upcraft
28th Jun 2018 13:36

Hello, I’m a member of the statutory payments forum with HMRC, BEIS and DWP. We have discussed this as it is much more common now a/typical workers are in pension schemes generally - such as zero hours workers with no normal pay. The law is silent on the appropriate calculation, so the view is as long as you’re consistent you can’t be wrong so suggestions such as your 12 weeks prior to the maternity start date or the pay during the average weekly earnings used for the SMP calculations would in my opinion be entirely appropriate

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