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What is the impact on pension if an employer authorises unpaid leave?

Up until 17 April 2022, if an employer authorises unpaid leave for less than 30 consecutive days, employee and employer pension contributions are paid to cover the period of absence. The member’s pension will be unaffected.
If the absence is for longer than 30 consecutive days, pension contributions are made for the first 30 days of the absence only. After this the member will not build up any pension for the period unless they choose to pay Additional Pension Contributions (APCs) to purchase the amount of lost pension. If a member chooses to pay APCs and they make their election within 30 days of returning to work, the cost is split between the member and employer.

From 18 April 2022, the rules were amended to say that contributions are only payable for the first 30 consecutive days of absence. Where the absence continues beyond 30 days then no contributions are payable (even for the first 30 days) other than the member wishes to cover the period on their return to work.

More information on unpaid leave is in section 6.3 of the Employer Guide.

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