If you currently pay more than the auto-enrolment employer minimums into your Workplace Pension you may be able to reduce this, for any staff you have furloughed.
This means you are able to pay employer contributions based on the amounts which can be reclaimed in full under the Coronavirus Job Retention Scheme - 3% of an employee’s qualifying earnings (up to a £2,500 maximum)
There are however some important things to think about including whether you can do this in line with your current employee contracts (as you may have included specific contribution levels in these) and if your scheme rules allow this (which may need to be checked with the pension provider)
Reducing employer pension contributions usually requires consultation, however The Pensions Regulator have announced a regulatory easement to the usual 60 day notification period (required for companies with more than 50 staff).
The relaxation will apply where:
- There are furloughed staff for whom you are making a claim under the Coronavirus Job Retention Scheme.
- You are proposing to reduce the employer contribution to your workplace pension in respect of furloughed staff only.
- For staff who have not been furloughed their existing pension contribution rate will continue to apply.
The reduced contribution rate for furloughed staff will only apply during the furlough period, after which time it will revert to the current rate.
You must also write to your affected staff to describe the intended change and the effects on the scheme and on your furloughed staff.
Please contact your Johnson Fleming Consultant to discuss if you have any questions regarding this.
COVID-19 Resource Centre
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