The Coronavirus Job Retention Scheme was set up by the government in response to the COVID-19 virus.
Omnium Employee Benefits explain more when it comes to pensions.
The Coronavirus Job Retention Scheme intends to support businesses and their employees through the outbreak by covering up to 80% of the costs of employment up to an overall cap of £2,805 per employee.
This includes salary, plus the employer’s National Insurance Contributions and the minimum employer pension contribution of 3% of qualifying salary required under automatic enrolment legislation.
- Where a business has made other arrangements with employees such as reducing pay (for example to 50% of normal salary), automatic enrolment contributions should continue, based on the reduced salary applying to each pay reference period.
- Where a business is carrying on its operations as normal, all automatic enrolment pension contributions must continue as normal.
- Where an employer is unable to make pension contributions, any missed contributions are to be made up at a future date. A recovery plan would need to be agreed with the Pensions Regulator.
- Where a business has ceased trading, no further contributions will be payable. However, if the scheme was in arrears prior to this there may be a claim on the assets of the business in respect of missed contributions, as is normally the case.
- If an employee is unable to work owing to sickness and is in receipt of Statutory Sick Pay, employers will need to continue deducting contributions from the member’s salary, as this forms part of pensionable qualifying earnings under automatic enrolment.
- For contract-based pension schemes, unless a contractual obligation exists within the employee’s contract of employment, the employer is not obliged to pay if the employee ceases payments.
- Under current legislation, there is no option to offer employees a contribution holiday.
The above information is based on Omnium‘s current understanding of the Coronavirus Job Retention Scheme legislation; this may change.