OSPS APEs: Temporary Absence

What happens if a member goes on sick leave?

If a member goes onto reduced pay because of sickness, even if they are receiving SSP only, they should continue to pay contributions as if they were on full pay. If this causes financial hardship the contribution level can be suspended, provided the member requests this in writing. You should give the member the opportunity to pay the arrears when they return to work, including the employer's contribution, if you are unwilling to pay.

In the case of unpaid sick leave, no contributions should be collected. You should give the member the opportunity to pay the arrears when they return to work, including the employer's contribution, if you are unwilling to pay.

If a member does not wish to pay the missing contributions then you should notify us on  Notification of absence (ABS1) form (19kb) and also record it on the annual return.

What happens if a member goes on maternity leave?

During paid maternity leave the member makes pension contributions based on the pay they actually receive, including any SMP entitlement. Normal contributions should be collected from you and the member during maternity leave on full pay. If the member goes on to reduced pay, you must make up the difference between the contributions due on the member’s usual pensionable salary and the contributions paid on the reduced pay received (including any SMP) in addition to your own normal contributions. If the member is paying AVCs, you have to make up the difference in these as well.

If the member takes approved unpaid leave after a period of maternity leave, no contributions should be collected. If, on return to work, the member wishes to make up these contributions, you must pay your corresponding share. If the outstanding contributions are not paid, a non-pensionable service break will be recorded on the member’s pension record.

The unpaid contributions, will be calculated based on the normal hours worked prior to going on maternity leave, taking account of any salary increases due while the member is on maternity leave.

If a member does not wish to pay the missing contributions then you should notify us on  Notification of absence (ABS1) form (19kb) and also record it on the annual return.

What happens if a member does not return from maternity leave?

If a member goes onto paid maternity leave and does not return to work or does not intend to return to work then contributions must be taken up to the end of the paid maternity leave period, including the SMP only period. The date of leaving OSPS is the date at which paid maternity leave ends, this is usually the SMP only period. If you recover Occupational Maternity Pay (OMP) from the member in these circumstances then you should not take account of pension contributions when calculating the net overpayment. We must receive full contributions for the entire paid maternity leave period.

When you send us the appropriate leaving form (usually Notification of member leaving employment (LEA1) form (119kb)), the date of leaving should be the end of the paid maternity leave period. It would help us to reconcile the contributions if you attach a note giving the dates on which the member was on reduced pay or SMP only. On the leaving form please give us the salary history as if the member had been working normally.

What happens if a member is absent from work temporarily?

If a member goes onto no pay for reasons other than illness or maternity leave and you expect the member to return to work, it may be possible for their OSPS membership to continue as normal.

In the case of unpaid leave, no contributions should be collected (but see next paragraph). You should give the member the opportunity to pay the arrears when they return to work, including the employer's contribution, if you are unwilling to pay. If a member does not wish to pay the missing contributions then you should notify us on  Notification of absence (ABS1) form (19kb) and also record it on the annual return.

For short no pay periods you may wish to take a pragmatic approach and collect full employee and employer contributions. This will mean will not have to go through the process of calculating arrears and notifying us of very short periods of unpaid leave on form ABS1 and the annual return.

How should I complete the annual return for members on reduced or no pay?

Please enter the salary history as if the member were working normally. Periods of no pay for which arrears of contributions have not been collected should be entered as a salary of zero with effect from the appropriate date. Please add a note at the end of the line saying that the member was on sick or maternity leave.

How to calculate contributions

If you have any problems calculating the appropriate level of contributions or the amount of arrears owed then please contact the Pensions Office for further advice and assistance.

Here are a few examples to give you some guidance. For ease of calculation, we have assumed that the periods of reduced pay and SSP/SMP coincide with the end of the calendar month, but in practice this is obviously unlikely.

Example 1 – Sick Leave

A member earning £18,000 per year goes onto half pay for one month and then onto SSP only for one month. After that they go onto no pay for one month before returning to work normally. The contributions deducted should be as follows (July 2009 rates).

The member should be given the opportunity to pay back the missing contributions for month 4. This will be £95.25 if you are willing to pay the employer contribution or £417.75 if you are not.

If the member could not afford to pay the contributions in month 3, the arrears would be £190.50 if you are willing to pay the employer contributions or £835.50 if you are not.

Example 2 – Maternity Leave

A member earning £18,000 per year goes onto reduced pay plus SMP for one month and then onto SMP only for one month. After that she goes onto no pay for one month before returning to work at 60% of full time. In month 4 she would have received a pay award if she had been at work, increasing her salary to £19,200 per year. The contributions deducted should be as follows (July 2009 rates).

The member should be given the opportunity to pay back the missing contributions for month 4. These should be calculated as if she were receiving full pay at the new rate of £1,600 per month, hence £101.60 for the member and £344.00 for the employer. If the member is willing to pay her share you have to pay yours.

In reality it is more likely that the pay award might occur in the middle of the SMP period, for example, which will complicate the calculation of the employer contributions. The member’s contribution is always the relevant percentage of the pay she receives, so the easiest way to calculate the employer’s contribution is as follows:

• Calculate the employee’s contribution based on actual salary payment being made;
• Work out the total pay the member would have received if she had been working normally;
• Calculate the total employee and employer contributions that would have been collected from this pay;
• Deduct the employee’s contribution from this figure to give the employer’s contribution.

If the member had not returned to work after SMP ended in month 3 and you are entitled to recover some of the OMP paid in month 2, for example, you must not adjust the pension contributions paid in month 2 and month 3. The member is entitled to OSPS membership up to the end of month 3 and OSPS must have the appropriate level of contributions.

Example 3 – Unpaid Leave

A member earning £18,000 per year has two days unpaid leave. For the sake of this example we have assumed that the notional pay for the unpaid leave period would be calculated as 2/31 of the monthly pay (i.e. £96.77), though you may calculate this differently. The contributions should be deducted as follows (July 2009 rates) if you take the strict approach:

The member should be given the opportunity to pay back the missing contributions for month 2. This will be £6.15 if you are willing to pay the employer contribution or £26.96 if you are not. If the member does not wish to pay the missing contributions you will need to give us details of the period of absence on  Notification of absence (ABS1) form (19kb)and on the annual return.

Alternatively, you could take the pragmatic approach to save administration and deduct contributions as if the member were not on unpaid leave:

If you take this approach you will not need to contact the member and record a two-day absence on  Notification of absence (ABS1) form (19kb) and the annual return.