Employee (EE) Contributions are calculated based on the period pay, inclusive of the SMP payments they are receiving, rather than their normal pay before they went on maternity leave.

Let's assume the following:

Let's start by ascertaining the employee pensionable pay for the period:

Employee Pensionable Pay

£1,000 + £500 = £1,5000

Now that we know the employer pensionable pay is £1,500, we can work out the Employee Contribution based on the %:

Employee Pensionable Pay * Employee Contribution %

£1,500 * 0.05 = £75

So in this example, the Employee Contribution would be £75.

Employer contributions must be calculated based on the employees normal earnings before they went on maternity leave, plus the sum of any additional pensionable elements for the period. This is different to employee contributions, which are still taken based on the period pay (inclusive of reduced SMP).

This calculation approach in line with established legislative guidance.

Let's assume the following:

Let's start by ascertaining the employer pensionable pay for the period:

Employer Pensionable Pay

((£30,000 / 12) + £500) = £3,000

Now that we know the employer pensionable pay is £3,000, we can work out the Employer Contribution based on the %:

Employer Pensionable Pay * Employer Contribution %

£3,000 * 0.04 = £120

So in this example, the Employer Contribution would be £120.