New regulations, the Additional Paternity Leave Regulations 2010 and the Additional Statutory Paternity Pay (General) Regulations 2010 came into force from 6 April 2010. Broadly, these regulations place obligations on employers to provide additional paternity leave of up to 26 weeks for fathers of babies born on or after 3 April 2011(and pay for a certain period of that leave). For further details, see our employment bulletin.
The broad effect of regulations on pension schemes is that for any paid additional paternity leave:
- DB schemes should provide continued accrual.
- Employers sponsoring DC schemes should continue to pay contributions at the same rate as before but based on the salary that fathers would be entitled to had they not been on additional paternity leave.
However, there are some grey areas in respect of unpaid paternity leave. There may also be a risk of sex discrimination claims if the terms offered to fathers during additional paternity leave are not equal to those being offered to mothers on additional maternity leave. It is important that any terms as to additional paternity leave should be considered in conjunction with those being offered to women during additional maternity leave.
Actions for employers and trustees
Employers and trustees of DB and DC schemes should:
- Give careful consideration to the legal requirements and decide what pensions terms to offer fathers on additional paternity leave.
- Even though the regulations are overriding, in the interests of certainty, update their scheme rules.
- Communicate the changes to pension scheme members.
More changes on the horizon
This month, the government also issued a consultation on proposals to replace the existing rules on maternity, parental and additional paternity leave and pay. The implementation date for these proposals is April 2015.