Jessica O'ConnorAhead of Mother’s Day on 30th March, research from interactive investor has highlighted a significant financial gap that women may face in retirement due to missed employer pension contributions during maternity leave.
According to interactive investor’s calculations, some women could be left with a £12,554 shortfall in pension wealth if employers mistakenly reduce their contributions based on statutory maternity pay, rather than their full salary.
Interactive investor has urged expectant mothers to take proactive steps to ensure they receive the pension contributions they are legally entitled to.
In response to a recent Sky News report, the platform outlined key questions that women should ask their employers before going on maternity leave.
Camilla Esmund, senior manager at interactive investor, emphasised the importance of pension engagement, particularly given the complexity of the UK pension system.
She said: “It’s not clear whether this is a widespread issue, but it is another reminder of the importance of pension engagement.
“Unfortunately, the pensions system is quite complex – so understandbly, it isn’t always easy for consumers to know what to look out for, or what to ask.
“But essentially, the rules are supposed to ensure women still get a full pension payment even while their pay is reduced, but in some cases, it seems this isn’t happening, so it is important that women check.”
The issue arises when employers incorrectly base pension contributions on statutory maternity pay, which is set at £187 per week from April 2025 after the initial six weeks.
As a result, women may unknowingly accumulate a substantial pension gap over their careers.
For instance, a woman earning £35,000 a year could see a £822 hole in her pension savings over 39 weeks of maternity leave, which, with investment growth, could expand to £4,534 by retirement.
Higher earners face even greater losses, with a woman earning £80,000 potentially missing out on £12,554 in pension wealth by retirement.
Esmund warns that such pension errors contribute to the broader gender pension gap, with women already facing an average of 35% less pension wealth than men by the time they retire.
She added: “These potential pension errors are yet another barrier when it comes to closing the gender pension gap.
“Women often take years out of the workforce or switch to part-time roles to care for their families.
“To help close this gap, it’s vital that women receive everything they are entitled to, especially during maternity leave.”
The financial implications extend beyond just a single maternity leave period. Many women have multiple maternity leaves, meaning the cumulative effect could see them losing thousands more in pension contributions over their lifetime.
Esmund said: “At a time when finances are already stretched, it’s extremely concerning that women could be missing out on valuable pension contributions.
“When planning for a baby, retirement might be the last thing on your mind, but taking a moment to check your pension could make a significant difference in the long run.”
