Compulsory Pension Contributions during Short Absences

Calculate UK LGPS pension contributions for qualifying short unpaid leave and unpaid parental leave absences.

Starting with absences on or after 1 April 2026, UK LGPS requires employee and employer contributions for unpaid leave or unpaid parental leave of 14 days or less. This update uses actual lost pensionable pay, eligible compensation, and LGPS Notional Pay to calculate contributions for qualifying absences.

Now you can

  • Identify unpaid leave and unpaid parental leave in absence and absence element setup.
  • Use LGPS Notional Pay with eligible compensation to calculate employee and employer contributions for qualifying short absences.
  • Apply the 14-day contribution rule separately to each authorized unpaid absence in the same pay period.
  • Support the 2025 LGPS consultation change for compulsory pension contributions during short absences.

Delivered to be legally compliant.

Steps to enable and configure

Create a new LGPS pension main element and follow these steps to get the new functionality implemented:

  1. Use the new Legislative Grouping Code for UK Parental Leave (ORA_HRX_GB_PARENTAL) in Absence Type setup. Legislative Grouping Code for UK Unpaid Leave is already available.
  2. Create absence elements with the seeded secondary classification for Unpaid Leave or Unpaid Parental Leave.
  3. Use lookup "What is the absence type for this absence payment" (ORA_HRX_GB_UNP_ABS_TYPE) with the new lookup values Parental Leave (ORA_HRX_GB_PARENTAL) and Unpaid Leave (ORA_HRX_GB_Unpaid) when you set up absence elements.
  4. Select no entitlement absences when you create the element for unpaid leave or unpaid parental leave.
  5. Manually feed the Eligible Compensation balance of the pension element with unpaid and unpaid parental absence entitlement results.
  6. Manually feed the <Base_Element_Name> LGPS Notional Pay information balance with unpaid and unpaid parental absence entitlement results.

Note:

No Legislative Grouping Codes are needed on the absence plan for unpaid leave or parental leave.

If the absence entitlement result is added to eligible compensation, subtract it in the LGPS Notional Pay balance so the lost pay is added back through notional pay.

If you don't create a new element, please follow the steps described in document 'Legislative Consultation Updates effective 1st April 2026' and do the formula changes manually.

Tips and considerations

Recording of absence records:

When an unpaid absence is recorded, the system checks the duration of this absence record. If a further unpaid absence follows immediately after the previous one, extend the end date, the system checks the duration of this absence again. If it is recorded as a separate absence record, this may affect the calculation of employee and employer contributions.

Notional pay rate:

Currently, the notional pay calculation uses the combined absence entitlement results for both Unpaid Leave and Unpaid Parental Leave. The system takes the overall notional pay balance and applies it to determine the valid number of absence days.
This means that when both absence types occur in the same month, the same notional pay rate is applied to both, and the deduction is calculated consistently across the combined absence days.

Access requirements

  • The source identifies Payroll Administrator as the job role for setup and verification.
  • No specific privilege names were identified in the source.

Employee and employer contributions are calculated only for authorized unpaid leave or unpaid parental leave that starts on or after 1 April 2026 and lasts 14 days or less. Absences longer than 14 days, and absences that start before 1 April 2026, don't calculate contributions on actual lost pay under this update. APP and non-APP absence scenarios use different calculation paths.