The Pensions Regulator (TPR) reminds us that pension duties continue even during a crisis
10 April 2020
TPR have acknowledged how challenging a time this is for employers and have stated that they will take a proportionate and risk-based approach towards enforcement decisions, to support both employers and pension savers.
TPR have updated their guidance to cover some of the key question areas for employers but take the opportunity to remind employers that their duties do need to continue during this time and highlight steps, that could be taken, to help ease the burden of enrolment and re-enrolment.
The guidance also addresses some of the questions that have been asked since the Coronavirus Job Retention Scheme was first announced.
The obligation for employers and staff to make contributions is set out in the pension scheme’s rules or other governing documentation.
Payroll processes and pension contributions
Where an employer is making a claim under the Coronavirus Job Retention Scheme (CJRS), the normal payroll process still runs as usual. Obligation for both employer and furloughed staff pension obligations remain unchanged and employers will still need to upload the contribution schedules to pension providers.
The CJRS does not require employers to make any changes to existing pension arrangements or payroll processes. The current scheme rules and contribution requirements will continue to apply.
Some employers calculate their pension contributions on a different basis and do not use banded qualifying earnings. This may be because they have chosen to certify under set 1, 2 or 3 and pension contributions are calculated from the first penny of earnings.
Where this is the case they will calculate and pay across pension contribution as normal. However, employers will also need to calculate 3% of the qualifying earnings of furloughed staff as part of the process for making the claim for the total grant under the Coronavirus Job Retention Scheme.
This is in addition to the existing pension contribution calculation in payroll, not instead of it.
TPR confirms that whilst employers who use a Defined Contribution (DC) scheme may be able to decrease their employer contribution, they cannot legally reduce employer contributions below the statutory minimum. If this action is considered there are a number of things to think about and taking appropriate legal advice is highlighted.
Employees may choose to opt-out of the scheme, but the employer must not coerce or encourage their employees in any way.
Further updates to employer guidance are due from the w/c 14 April 2020.