Millions could face a £12,554 gap in their pension wealth due to employers miscalculating contributions, according to new research.
This error could have a major impact on long-term retirement savings, as missing contributions fail to benefit from investment growth over time.
Interactive investor, the UK's second largest investment platform for private investors, has found that some employers are mistakenly basing pension contributions on statutory maternity pay rather than women's full salaries.
The issue appears to stem from employers unintentionally reducing pension payments when women go on maternity leave.
With statutory maternity pay set at just £187 per week after the first six weeks from April 2025, the difference between contributions based on full salary versus reduced pay can be substantial.
Women are being urged to check their payslips and speak to HR departments to ensure they don't miss out on their entitlements.
The rules on pension payments during maternity leave are clear but often misunderstood
GETTYFor a woman earning £35,000, incorrect pension contributions during a 39-week maternity leave could create an £822 gap, which could grow to £4,534 by retirement due to missed investment growth.
Someone on a £50,000 salary could face a £1,307 gap over their maternity leave, potentially growing to £7,209 by retirement.
For those earning £80,000, the immediate shortfall could be £2,276, expanding to a staggering £12,554 by retirement.
These calculations assume pension contributions of five per cent and investment growth of five per cent net of fees over 35 years.
The compounding effect of missed contributions highlights why addressing this issue early is crucial for women's long-term financial security.
Camilla Esmund, senior manager at interactive investor, 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 rules on pension payments during maternity leave are clear but often misunderstood.
Employers should base their pension contributions on a woman's full salary before maternity leave begins. However, a woman's own pension contributions are calculated on her reduced maternity pay.
This means that while an employer should continue paying the same amount into a pension, the employee will pay less during maternity leave.
For example, an employer should contribute £146 monthly to the pension of a £35,000 earner throughout maternity leave, totalling £1,313 over 39 weeks.
If incorrectly based on maternity pay, this could drop to just £54 monthly or £490 total.
It's also important to note that if a woman stops her own contributions, the employer may legally stop theirs too. After 39 weeks, employers can stop pension contributions as this period is unpaid.
Esmund continued: "These potential pension errors are yet another barrier when it comes to closing the gender pension gap, with many women struggling to build retirement wealth.
Interactive investor has outlined key questions women should ask their employers before going on maternity leave
GETTY"On average, women have 35 per cent less pension wealth than men by retirement because they often take years out of the workplace and are more likely to work part-time to care for their family.
"To help close this gap, it’s vital that women get everything they are entitled to, especially on maternity leave"
Interactive investor has outlined key questions women should ask their employers before going on maternity leave to ensure they receive correct pension contributions.
Women should ask: "What employer pension contributions will I receive on maternity leave, and is this based on my full pay before maternity leave?"
They should also clarify how much they will pay each month in employee contributions. Another important question is whether the employer will stop contributions if the employee stops paying in.
Women should also ask if their employer pays pension contributions
GETTYWomen should also ask if their employer pays pension contributions after the standard 39 weeks of maternity leave.
Esmund advises: "When you're planning for a baby, your pension and retirement might be the last thing on your mind.
"But taking a moment to check your pension could make a big difference to achieving your retirement goals."
She emphasises the importance of continuing personal contributions during maternity leave to ensure employer contributions continue.
