The Government has made a number of significant changes to the economy as a whole, in order to help the economy weather the storm that the Coronavirus pandemic has caused.
Are employers still required to comply with auto-enrolment?
Employers still need to automatically enrol eligible workers into an auto-enrolment pension scheme – there has been no change here.
If an employer uses the Coronavirus Job Retention Scheme, are pension contributions still needed?
It is important to note the details of the Coronavirus Job Retention Scheme:
· Employers would receive a grant of 80% of employment costs for each “furloughed worker”, capped at £2,500 per month
· Employers also receive the associated employers National Insurance contributions and minimum auto-enrolment contributions on the amount paid to each employee.
Are the Pensions Regulator still enforcing auto-enrolment in the same way?
Having said that, although the rules regarding enrolling Eligible Jobholders and making payments to workplace pension schemes have not changed, The Pensions Regulator (TPR) is giving employers more time to pay pension contributions before taking any enforcement action.
Under the current pension codes of practice, pension providers are required to report to TPR any employer who fails to pay pension contributions within 90 days of the due date, usually the 22nd of the month following deduction from pay. Failure to pay contributions on time could see prosecution, which can include significant fines.
On the 27th March 2020, the Pensions Regulator said “To give employers extra time during this period we are asking [providers] to report at 150 days late instead of the 90 days set out in the code. This will give you longer to work with employers to bring payments up to date, as well as extending the period to report to TPR and to members.”
Why have the Pensions Regulator changed their approach?
A spokesperson at TPR said: “In these unprecedented times, we are highly aware of the strain employers are under due to Covid-19 and the impact this will have on their business, staff and resources. Our focus is on supporting employers and savers at this challenging time. To help employers, we are working closely with pension providers and asking them to be as flexible as possible when agreeing payment plans so that some employers can pay AE contributions over a longer period if necessary.”
The payment of pension contributions can be a sensitive issue with employees, with many becoming frustrated if contributions are not invested in a relatively short time after deduction from pay. We would therefore encourage all employers as far as practicably possible to continue to make contributions in advance of the 22nd day deadline.
Should this cause a problem we recommend opening a dialogue with your workplace pension provider and potentially TPR as soon as possible.
Where can I get more help?
If you would like further information or advice, please contact Brunsdon Financial on:
The information provided does not constitute advice or recommendation. Any information regarding tax treatment is based on our understanding of current tax law and HM Revenue and Customs practice, all of which may be subject to change.