Warning to parents facing SMP maternity or paternity pay

Experts are warning that one in seven (14%) saw their credit score drop as a result of SMP (Statutory Maternity Pay), or other forms of maternity or paternity leave. Six in 10 (59%) took on new debt due to the drop in income to maternity or paternity pay, borrowing an average of £2,658.

Those parents, on average, didn’t clear their debt until their child was over the age of three, when the expensive nursery years were over. This is despite most having saved an average of £4,913, to take care of essential bills ahead of their baby’s arrival.

The research was completed by smart money platform  Intuit  Credit  Karma reveals that a quarter (25%) are still in debt when their child starts school aged five, and one in every 30 families (3%) are still struggling when their child reaches double digits.

NOT something to celebrate on International Women’s Day: #maternity pay is less than half the National Living Wage. Take action with us to #EndPregnancyPoverty 👉https://t.co/wOQ6nYGOeK #IWD2025 pic.twitter.com/j61U7VxPzf

— Maternity Action (@MaternityAction) March 6, 2025

How much maternity or paternity leave can parents take?

In the UK, Statutory Maternity Leave is 52 weeks. It’s made up of:

• Ordinary Maternity Leave – first 26 weeks
• Additional Maternity Leave – last 26 weeks

You do not have to take 52 weeks but you must take 2 weeks’ leave after your baby is born (or 4 weeks if you work in a factory).

What is Statutory Maternity Pay?

Statutory Maternity Pay (SMP) is paid for up to 39 weeks. You get:

• 90% of your average weekly earnings (before tax) for the first 6 weeks
• £184.03 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks

SMP is paid in the same way as your wages (for example monthly or weekly). Tax and National Insurance will be deducted.

How much is Paternity Pay?

The statutory weekly rate of Paternity Pay is £184.03, or 90% of your average weekly earnings (whichever is lower).

Any money you get is paid in the same way as your wages, for example monthly or weekly. Tax and National Insurance will be deducted.

Expectant mums & new parents need @RachelReevesMP to do better on statutory #maternity pay in her upcoming spending review. Please campaign with us, email your MP to take this message to Government!🙏#EndPregnancyPoverty https://t.co/UnPSeLIkNT pic.twitter.com/iNGrAWxQIz

— Maternity Action (@MaternityAction) February 11, 2025

The UK’s poor statutory parental leave policies are exacerbating financial hardship and could be pushing new parents into debt, a cost they are not able to clear until their child’s third birthday. 

Planning for reduced income while on Statutory Maternity Pay

According to the research, (81%) of parents planned for the income drop and added expenditure that comes with parental leave. The average parent saved £4,913 before going on maternity or shared parental leave. 

For many couples, this meant making sacrifices well before the baby’s arrival. In a third of couples (33%), one or both parents took on additional work including overtime, freelance work, or setting up a ‘side hustle’ to prepare financially.

However, 13% of new parents admitted they didn’t consider putting aside any money until it was too late. 

Recommended reading:

The cost of parental leave is also reshaping the workforce. More than a quarter (28%) of parents were forced to return to work sooner than they would have liked in order to pay off mounting debts.

Further, 13% of parents have moved jobs to an employer with better enhanced parental leave, subsidising the statutory amount offered by the government.

This trend was particularly pronounced among fathers taking shared parental leave – 21% of men taking shared parental leave had switched jobs to an employer offering enhanced benefits, compared to 9% among women taking maternity leave.

Akansha Nath, General Manager (International) at Intuit Credit Karma, says: “Parental leave should be a time for families to bond and welcome their new arrival, not a source of financial distress. For parents concerned about managing finances during leave, it’s essential to plan ahead.

“Setting aside savings where possible and carefully budgeting for your reduced income and unexpected expenses can help alleviate financial strain. 

“You can research better value ways to manage the debt effectively, such as exploring personal loans or credit cards with the best rates, or balance transfer cards with an interest-free period to help pay down debt.”