Starting a pension while pregnant - tax implications for maternity leave etc

[ReesesPieces]

I will be going on maternity leave later this year and receiving only statutory maternity pay, so things will be a bit tight.

I'm 35 with no pension - I had a pension when I worked in the UK which is still over there, only worth about 30k GBP and I have just been slow to set one up since we moved back. However I'm very aware that if I wait till I return to work from maternity leave, that will be another year gone, and my employer matches contributions to 3% so its all lost money.

I work for a small company with no HR so there's nobody to check these things with, but I am wondering:
(1) If I start a pension in the next month or so, can I start contributions from my salary then pause it till I return from maternity leave
(2) If I start a pension, are my employers obliged to continue paying into it while I'm on leave if I match the contributions myself
(3) Is there a way to retrospectively put a lump sum in at the end of maternity leave and what is the tax implication - I will only be earning statutory maternity benefit, and taking some unpaid leave, so I assume the usual tax benefits don't apply?
(4) Does another year at this stage make enough of a difference I should do this now, or is it much of a muchness if I wait till I'm back after maternity?

We have spent the last few years saving hard for a mortgage deposit and we have a v good LTV on our house, but the pension issue makes me feel as if I've been quite financially irresponsible and should really act sooner rather than later.

 

[Steven Barrett]

Hi

I am no expert on the tax or legal aspects of maternity but I will try to answer your questions based on what I have seen in practice:

1. Yes, you can start your work pension and stop it when you go on maternity. You will not be in receipt of any earned income when on maternity anyway, which means you cannot get tax relief on any contributions (you find it difficult to afford it anyway with just the social welfare payments).
2. As far as I am aware, they have to. They cannot discriminate against you because you are on maternity leave. Someone may be able to confirm this with certainty. In practice, I have never seen contributions stopped when someone went on maternity leave.
3. You can always make a pension contribution in respect of the previous year. So you can make a contribution in respect of 2017 all the way up to November 14 2018. The same will apply next year, you will have up to November 2019 to make a contribution in respect of 2018. You can contribute up to 20% of your earned income for that year. You will receive tax relief at your marginal rate, 20% or 40%.
4. Depends on how much you are putting in. Your employer contribution of 3% is the lowest level of contribution I see (I know a lot don't contribute anything and I've never seen a 1% or 2% contribution). Unless you're on big money, it probably won't make a massive difference to your end pension pot. But, when you have the baby, you will have a load more expenses and it'll be an easy excuse for you to put it off again. It would be better to get things started while you have some spare cash and have it come directly out of pay so you get used to paying it each month. Otherwise, that 1 year will become 4/5 years and that will make a difference.

I hope this helps and best of luck

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)