Contingent charging will be banned in most scenarios, but exceptions will be applied in extreme circumstances, such as where somebody is suffering from ill-health, or is experiencing severe financial hardship.
The FCA made the announcement with the hope that the ban will “reduce conflicts of interest” that arise under the contingent charging model. It is hoped that this will encourage advisers to give the instruction for savers to “stay put” where it suits clients best.
The ban will come into effect from 1 October 2020.
Advisers will still be able to provide an abridged advice process which should help to grant consumers access to initial advice at an affordable cost. The FCA will implement proposals relating to this in due course.
The FCA confirmed that, although many firms voiced their opposition to the ban, an equal number of firms actually supported it.
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The Pensions Regulator updates guidance in relation to changes to the CJRS and how this will affect pension contributions 17 June 2020 The Pensions Regulator (TPR) has published updated COVID-19 guidance for employers in recognition of the fact that, from 1 July 2020, staff may be furloughed on a flexible basis, and permitted to return to work part-time for their employer. It also considers that, for claims commencing on, or after, 1 August 2020, employers no longer have the option to claim a grant for up to the statutory minimum automatic enrolment (AE) employer contribution. For individuals who are working for some of the hours in a claim period but are also being furloughed for a proportion of hours in July 2020, employers will need to calculate the total pay, and pay this via the normal payroll process. Both employee and employer pension contributions must be calculated on this total amount of pay. To illustrate, if an employee earned £100 for hours worked and adjusted furlough pay of £50 for furloughed hours within the claim period, then £150 must be processed through payroll, and pension contributions under the employer’s pension scheme rules must be based on the full £150. Employers will need to be aware of the amount of furlough pay that is included in the total pay for the pay period as it is only on that amount, that they may claim a grant for up to the statutory minimum employer pension contribution. To use the previous example, employers will only be able to claim a grant of up to the statutory minimum AE employer contribution on £50 as that is the amount of pay that relates to furloughed hours.
For claims starting on or after 1 August 2020, employers no longer have the option to claim for the employer pension contribution figure on furlough pay.
Employers must continue to pay employees who are on furlough the lower of 80% of their reference wage or salary, or £2,500. The government will still fund this 80% for claims relating to August, but will fund 70% in September 2020 and 60% in October 2020. Employers will be required to ensure that employee pay remains at 80%, or £2,500, if capped, so will need to contribute in September and October to bring employee pay up to 80%. Pension contributions should be calculated and paid across on the full amount of pay but employers cannot claim any of this back through the Coronavirus Job Retention Scheme (CJRS). Employers will be required to pay more than the statutory minimum contribution if their worker is working part-time during the furlough period, for July 2020 only. Where this is the case, any contributions over the AE statutory minimum contribution will not be funded by the CJRS. Employers should, however, carry on making the correct contributions due under the scheme, and so will be required to pay a portion of the pension contribution themselves.
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The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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