The Pensions Regulator have released guidance for employers calculating workplace pension and national insurance contributions.
Source: Pensions Regulator
Automatic enrolment and DC pension contributions: COVID-19 guidance for employers
We know this is a challenging time for everyone and we recognise the strain this is putting on employers.
We will take a proportionate and risk-based approach towards enforcement decisions, in light of these challenging times, with the aim of supporting both employers and savers.
We are working with HM Treasury and the Department for Work and Pensions to feed into the Coronavirus Job Retention Scheme’s central guidance on the pensions element of the grant.
This new guidance recognises that:
- from 1 July 2020, staff on furlough under the Coronavirus Job Retention Scheme may work part of the time for their employer
- for claims starting on or after 1 August 2020, employers will no longer be able to claim a grant for up to the statutory minimum automatic enrolment (AE) employer contribution
Automatic enrolment duties
Have my workplace pension duties changed?
Your automatic enrolment (AE) duties continue to apply as normal, including your re-enrolment and re-declaration duties and paying contributions. This is the case whether your staff are still working or are being furloughed as part of the Coronavirus Job Retention Scheme.
New employers
If you are a new employer, you should continue to assess your staff and put them into a pension if they are eligible. You can also use a process called postponement which postpones your duty to assess new or newly eligible staff (and therefore make pension contributions) for up to three months.
Re-enrolment
Many smaller employers are approaching or carrying out their first re-enrolment of staff. We will continue to write to you with information and support on how to carry out your re-enrolment duties and complete your re-declaration of compliance, recommending that you assess your staff for re-enrolment on the third anniversary of your staging date or duties start date.
You cannot use postponement at re-enrolment. However, if you are struggling to complete your re-enrolment duties on the third anniversary of your staging date or duties start date due to the coronavirus pandemic, you can choose a later date up to three months after your third anniversary to assess your staff. Use our re-enrolment date tool to see your available dates.
Government Business support packages
We know that these are challenging times. If your business is struggling with cashflow as a result of the coronavirus, the government has published information about the support available for employers such as:
- the Coronavirus Job Retention Scheme for staff furloughed on or before 10 June 2020, if you are struggling with maintaining your current levels of staff
- deferring VAT and Self-Assessment payments
- a Statutory Sick Pay relief package for small and medium sized businesses
- a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in Great Britain
- small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for small and medium sized business through the British Business Bank
- a new lending facility from the Bank of England to help support liquidity among larger firms
- the HMRC Time To Pay Scheme
Find out about the different support packages available on the Business Support website.
Make a claim for the Coronavirus Job Retention Scheme.
We want to help employers to keep going in these challenging times, so we will take a proportionate and risk-based approach towards enforcement against those who fail to meet their duties.
Maintaining pension contributions
Do I have to continue paying pension contributions?
The obligation for you and your members of staff to make contributions is set out in your pension scheme’s rules or other governing documentation.
Your staff may choose to either reduce their contribution level (if the scheme rules allow this) or opt out or cease active membership of the scheme if they decide that is right for them at this time. However, you must not encourage or induce them to choose this option. If staff choose to reduce their contributions your scheme rules may allow you to reduce your employer contributions or retain them at the current rate.
Any member of staff who reduces their contribution below the statutory minimum, or opts out, or ceases active membership, must be put back into the pension scheme at the next re-enrolment date provided they:
- Meet the criteria for re-enrolment.
- reduced their contribution below the statutory minimum, opted out or ceased active membership more than 12 months before the re-enrolment date. If they have opted out or ceased active membership within the 12 months before the re-enrolment date you can choose to re-enrol them, but you don’t have to.
Any member of staff who reduces their contribution below the statutory minimum, or opts out, or ceases active membership, can also choose to opt back in to pension saving before the re-enrolment date if they wish.
Unless a member of your staff asks to opt out of their workplace pension or reduces their contributions, you and your staff members must continue to make the contributions required under the scheme at the correct time.
Any staff contributions you deduct from their wages must be paid to the scheme and not used for any other purposes.
If you’re struggling to make pension contributions
We appreciate that this is a challenging time in terms of cashflow and resources. The Coronavirus Job Retention Scheme means that employers with furloughed staff are able to claim a grant from government to include the employer pension contribution on the wages included in the Job Retention Scheme up to the level of the statutory minimum AE employer pension contribution for claims ending before 1 August 2020.
If you think you may not be able to make your pension contributions, contact your provider in the first instance to explore whether there is flexibility to change the due date for payment of employer contributions to a future date or, whether they may be able to help you plan to pay contributions over a longer period. You could also consider using the government support packages, which are there to help with cashflow.
For more information, click here.