The Pensions Regulator has confirmed that employer auto-enrolment duties continue to apply as normal, including your re-enrolment and re-declaration duties. This is the case whether your staff are still working or are being furloughed as part of the Coronavirus Job Retention Scheme. Where possible, please continue to follow your normal payroll processes and pay contributions when they are due.

If you are struggling to make pension contributions 

We appreciate that this is a challenging time in terms of cashflow and resources. The government recently announced that the Coronavirus Job Retention Scheme would include the employer’s statutory minimum AE contribution.

If you make a claim for a grant (to cover the lower of 80% of furloughed worker’s salary or wage or £2,500 per month), you will also be able to claim the employer pension contribution on those wages up to the level of the statutory minimum employer pension contribution.  If you think you may not be able to make your pension contributions, please contact us. You could also consider using the government support packages, which are there to help with cashflow.  See https://www.nidirect.gov.uk/articles/coronavirus-covid-19-business-and-employers and https://www.gov.uk/coronavirus/business-support

Payroll processes and pension contributions

If you are making a claim under the Coronavirus Job Retention Scheme, your normal payroll process still runs as usual. Deductions such as tax and national insurance contributions, as well as pension contributions, will continue to be made from your furloughed member of staff’s pay and paid as usual. You and your furloughed staff’s pension obligations remain unchanged, you will still upload the contribution schedules as normal, and pay the staff and employer pension contributions over to the scheme.

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 you will calculate and pay across your pension contribution as normal to the Scheme. However, you will also need to calculate 3% of the qualifying earnings of your 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 your existing pension contribution calculation in payroll not instead of it.

Employers paying more than the statutory minimum contribution

You might pay more than the statutory employer minimum AE contribution included in the grant under the Coronavirus Job Retention Scheme because:

• You choose to pay your furloughed worker more than 80% of their salary or more than £2,500 a month
• You choose to use certification and the scheme rules or governing documentation may require contributions from the first penny of earnings (this applies to WPT-E employers formerly Enhance Construction Pension Scheme).
• Your contribution rate is higher than 3%
• You pay the total contribution and your member of staff does not pay any: this will be the case if you use salary sacrifice on pension contributions

If you are paying more than the AE statutory minimum contribution, the excess will not be funded by the Coronavirus Job Retention Scheme. You should continue to make the correct contributions due under the scheme and in this case will have to pay a proportion of the pension contribution cost yourself.