‘Has maternity leave 25 years ago ruined my retirement?’

QI hope you can help me. I worked for a company between 1991 and 1999, saving into a final salary pension scheme that I thought would be based on my final salary.

Then in 1999 I was made redundant. In 2009 I started to work at a university and wondered whether it would be beneficial to transfer my company benefits to the university and buy additional years in that scheme. I noted that I had never received any statements from my pension provider so I chased them up. I was dismayed to find that my pension was based on my final three years at the company, in which time I had taken a period of maternity leave. At the time this did not seem fair but I didn’t challenge it. I have recently turned 60 and started to take my pension.

Is there any way I can challenge this, even at this late stage? A quick Google suggests to me that if I had carried on paying my contribution during my period of leave, I would receive the full amount. This was never offered as an option to me. I left the company via a compromise agreement so I have no recourse.

– Pauline

Dear Pauline

AI made some brief inquiries into how final salary is usually worked out. During my inquiries, I discovered that some final salary defined-benefit schemes discount from their calculations any period of time when pay was reduced owing to sickness or maternity leave. This means that if the worker saw a drop in pay in the final years of employment, earlier years will be used in the calculation instead. That’s precisely to deal with the kind of problem you have experienced. The way your scheme ‘You have a right to ask for the scheme’s rules, which should give details of how final salary is calculated’ works would have been written into the scheme rules and it may be that such a work-around was not in place for your scheme at that time.

But if it was, you may be able to claim that the rules were not applied properly in your case.

You have a right to ask for the scheme’s trust deeds and rules, which should give details of the way the final salary is calculated. They should also give reference to how the scheme treats periods of lower pay towards the end of someone’s employment.

After getting hold of the scheme rules, it may be worth contacting the Pension Ombudsman. However, I have to say it is unlikely they would be able to take up your case, because so much time has elapsed since you worked at the company. Usually, applications to the ombudsman need to be made within three years of the event or – if later – within three years of when you became aware of the issue, or “should” have been aware of it.

That said, as you mention, you did not receive communications about your pension for a long period of time. In addition, you say you were not informed that you would have to carry on paying in during your period of leave in order to get the full entitlement.

I’d like to think that maternity rights have come a long way in the 25 years since you left this employment, because there must be many other women who took time out of work to care for children at precisely the wrong moment for a final salary calculation who have been left similarly short, compared to what they would have had if they had simply left work altogether before having children.