It’s a very difficult time in the world of business because of the coronavirus.
A key area that companies are looking at is how they can save costs so they do not have to lay off staff. An area which will naturally draw attention is the Government Workplace Pension legislation. With this in mind, we’ve laid out some brief FAQ’s to help companies:
| Question | Answer |
| Can employers put their scheme on a contribution holiday? | Although TPR have not given a definitive view as to whether employers can apply a contribution holiday to their scheme, we would encourage employers if they can, to continue making contributions in the normal way. If employers are concerned about whether they can meet their ongoing duties, we suggest they speak to TPR. |
| Should employers continue making pension contributions if members are off sick? | Yes. Employers will need to continue deducting contributions from the members’ salaries. Statutory sick pay is part of the qualifying earning rules for automatic enrolment. |
| What should employers do if any members want to stop paying into their pension? | Members can stop/restart their contributions at any time. Automatic enrolment rules also give employers the option of stopping their contributions. However depending on the schemes rules for occupational pensions schemes, or contracts of employment, there may be a legal obligation for employers to continue paying them. |
| What should employers do if any members stop paying into their pension, but they want to continue contributions? | If the member’s contribution stops, employers will need to stop deducting contributions from their salary. And similar to above, employers will need to check to see if there are any conditions that apply to minimum/matching contribution amounts. And then ensure they update their schedules to reflect the new contribution |
| Do employers still need to make pension contributions if employees’ take unpaid leave? | If the employer is not paying any salaries, then they wouldn’t need to make any pension contributions. |
| If employers need to reduce salaries, do they still need to make the pension contributions? | If the salary has been reduced, any pension contributions the employer makes, should be based upon the revised salary. It’s important employers check that any reduced pension contributions are still in line with any specific arrangements they have with employees. |
| Can employers change the certification basis of their scheme? | If the scheme’s contribution basis meets the statutory minimums then yes they can change the scheme’s basis. If they decide to make the change, they’ll need to let us know as well as keep a record of this in case TPR ask for evidence and they’ll also need to let their employees. |
| If the employers are taking on any new employees, should they still enrol them into the scheme? | Yes. Until TPR provide any other advice around new joiners, employers should continue to enrol any new employees into the scheme in the normal way. |
| If the current situation means employers can’t make their pension contributions on time what are their options? | We appreciate that current circumstances will be challenging for employers, however until TPR tell us otherwise, employers should try to make their pension contributions as soon as they can. If employers are concerned about whether they can meet their ongoing duties, we suggest they speak to TPR. |
| What information is available for scheme trustees? | To help trustees meet their ongoing responsibilities, TPR have issued a guidance note |
| During an income protection claim, is the claim amount based on pre Furlough salary or Furlough salary? | Any claim in payment would continue to be paid in the normal way. Any claim made whilst an individual is made Furlough still needs clarification, however, it is our assumption that the claim would be paid on the individuals ‘pre Furlough’ income. |
| If an employee is made Furlough, would a Life Assurance claim be based on pre Furlough salary? | Yes, as per the temporary absence rules, any eligible claim would be paid on the employees ‘pre Furlough’ salary. More information can be found in 1.6 of the following link: *Note – Most providers are similar but please check specific provider rules. |
We’re here to help…
We know this is a difficult time. If you need a bit of guidance in regards to your options with your company pension scheme, or you have questions about your benefits, please contact us on 01483 881111 or support@cbbenefits.co.uk
