How Paternity Leave Affects Your Pension
Standard paternity leave is one or two weeks, during which you receive Statutory Paternity Pay (SPP) of £184.03 per week (2025/26) or 90% of your average weekly earnings, whichever is lower. During this period, your employer must continue pension contributions based on your normal salary.
The short duration means the direct pension impact is minimal. However, if you take Shared Parental Leave (which can be up to 50 weeks), the pension implications become much more significant.
Your Pension Rights During Paternity Leave
During paternity leave:
- Employer contributions: Must continue at the level based on your normal salary
- Your contributions: Calculated on your actual pay (which may be reduced to SPP level)
- Pension scheme membership: Continues uninterrupted
- Benefits accrue: As if you were working normally
Shared Parental Leave and Pensions
Shared Parental Leave (SPL) allows parents to share up to 50 weeks of leave and 37 weeks of pay. If you take SPL, your pension rights mirror those of maternity leave:
- During paid SPL, employer pension contributions continue based on normal salary
- During unpaid SPL, neither party needs to contribute
- NI credits may be available during unpaid periods
SPL can be a useful tool for balancing the pension impact between both parents. If one parent has a higher salary or better employer pension matching, the other parent taking more leave can minimise the total household pension impact.
National Insurance Implications
Standard paternity leave has minimal NI impact because it is so short. However, if you take extended Shared Parental Leave:
- Paid leave: NI contributions continue through your pay
- Unpaid leave: You may need NI credits. If your partner is claiming Child Benefit, they receive the credits by default. Credits can be transferred between parents via form CF411A
Common Mistakes and How to Avoid Them
These are the key pension mistakes to avoid during paternity and shared parental leave:
- Not checking employer contributions: Verify your employer is maintaining contributions correctly during leave
- Ignoring shared parental leave options: SPL can be structured to minimise the pension impact on the household
- Forgetting about NI credit transfers: If your partner is not working, they should claim Child Benefit for NI credits, which can be transferred if needed
- Not planning ahead: Consider increasing contributions before or after leave to compensate for any gap
What Your Employer Must Do
Your employer has specific legal obligations during your paternity leave:
- Continue pension contributions at the normal salary rate
- Not treat you less favourably because you are on paternity leave
- Maintain all other employment benefits
- Allow you to return to the same role on the same terms
If you believe your employer is not meeting these obligations, contact ACAS or seek legal advice.