Pensions
Pension contributions
The Pensions Regulator provides guidance for employers during the pandemic
T his is a difficult time for employers. The pandemic has led to unprecedented challenges for everyone. Automatic enrolment (AE) has led to more than 10,300,000 people saving or saving more for their retirement. This is thanks to 1,600,000 employers doing the right thing for their staff by meeting their pensions duties. The Pensions Regulator (TPR) wants to support employers to help them meet their AE duties so that staff continue to have the opportunity to save for retirement now and in the future. We know that in these uncertain times, employers may have questions about their pensions’ duties. TPR have published useful guidance (https://bit.ly/318XK0d) which includes information about the government’s support for employers, questions around payroll processes and pension contributions, flexibilities around re-enrolment, what employers must do if staff ask to opt out or reduce contributions, as well as guidance for new employers. ● New employers – New employers should continue to assess staff and put them into a pension scheme if they are eligible. They can also use postponement which postpones their duties to assess new or newly eligible staff – and therefore to make pensions contributions – for up to three months. ● Maintaining contributions – Though these are challenging times in terms of cashflow and resources, TPR expects employers to continue making the correct pensions contributions for staff, and are monitoring this closely. Employers concerned that they will struggle to make their pension contributions, should contact their pension provider in the first instance to check if there is flexibility to change the due date for payment of employer contributions to a future date. Providers may also be able to help the employer plan to pay contributions over a longer
...employers must not encourage or induce them to choose this option.
period. Employers can also consider using the government support packages (https://bit.ly/3hlL101), which are there to help with cashflow. ● What if staff ask to stop paying contributions – Some staff may choose to either reduce their contributions (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, employers must not encourage or induce them to choose this option. If staff choose to reduce their contributions, the scheme rules may allow the employer to reduce their employer contributions or retain them at the current rate. Any member of staff who reduces their contribution below the statutory minimum, opts out, or ceases active membership, must be put back into the pension scheme at the next re-enrolment date so that they have the opportunity to re-start saving. Staff can also ask to opt back in to pension saving before that date, if they wish. ● Re-enrolment – Many smaller employers are approaching or carrying out their first re-enrolment of staff. TPR will continue to write to employers with information and support on how to carry out their re-enrolment duties and re- declaration of compliance. Employers cannot use postponement at re-enrolment. However, those struggling to complete their re-enrolment duties on the third anniversary of their staging date or duties start date due to the coronavirus pandemic, can assess staff at a later date up to three months after the third anniversary of their staging date or duties start date. ● AE duties for furloughed staff – As with all other staff, AE duties for furloughed
staff apply as normal, and employers will assess them based on the amount of money they are paid. This means that if an employer has agreed to reduce their pay, they will be assessing them based on the reduced amount. If a member of staff meets the criteria to be put into a pension scheme, they must be enrolled whether they are furloughed or not, or the employer can also use postponement. If a postponement period ends during the furlough period, and the worker meets the criteria to be put into a pension scheme, the employer cannot use postponement again and must put them in. If a worker turns 22 during the furlough period and their earnings mean that the criteria to be automatically enrolled are met, the employer can put them into their pension scheme or delay this for up to three months by using postponement. The effect of reducing the pay for a furloughed member pay may mean that they will not meet the criteria to be put into a pension scheme during the furlough period. When their pay increases after the furlough has ended, the employer must continue to assess them and enrol them if they are eligible. n More information More information, including technical guidance for employers and their advisers can be found on our covid-19 pages (https://bit.ly/318XK0d). To ensure employers have the support and up to date information they need as they navigate the challenges ahead, TPR are continually reviewing and updating their guidance to respond to developments. Employers should check this guidance regularly.
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| Professional in Payroll, Pensions and Reward |
Issue 63 | September 2020
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