Coronavirus – Workplace pension schemes – FAQs

Published by Tom Bulbrook on 26 March 2020

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Last updated 26 March 2020

Can I stop or defer paying employer pension contributions?

Currently no. Auto-Enrolment regulations state the employer has a legal obligation to make employer pension contributions for eligible employees all the while the jobholder remains an active member of the pension scheme.

The latest notification from The Pension Regulator, around 2 weeks ago, was that this benefit should continue to be paid.

Contributions can only be stopped if the employee themself wishes to opt out, or request a ‘payment holiday’, where they do not meet their minimum contributions. Employers should however exercise care so to not be misconstrued as encouraging employees into stopping pension contributions.

It is unclear at the moment whether The Pensions Regulator may become more flexible with this to help businesses manage cash flow at this difficult time.

What happens if due to current circumstances I miss my Duties Start date or Re-enrolment date?

With the situation facing most businesses at the moment, it is currently unclear whether The Pensions Regulator will be flexible with missed dates, however with many workplaces effectively closed, I would be surprised if there was not some leniency, or an appeal could be submitted for consideration at least.

As an employer can I defer making backdated pension contributions if I have completed my Auto Enrolment duties after my Duties Start Date?

Unavoidably there are currently some businesses, especially in certain sectors, receiving no income. Ordinarily there would be an expectation that any backdated pension contributions as a result of a delayed workplace pension scheme set-up would be paid prior to completing a Declaration of Compliance with The Pensions Regulator.

It is currently unclear whether The Pensions Regulator will be flexible with this situation, particularly if a company is struggling financially.

Are employees able to opt out or stop their employee pension contributions for a short period of time, and if so, will the employer have to continue making contributions on their behalf?

Yes, employees can opt out at any point and therefore stopping the requirement for both employee and employer contributions to be paid. However, employees should be made aware that their employer can then defer allowing them to opt back in to the pension scheme for up to 12 months.

If an employee simply wishes to just stop pension contributions for a few months, possibly to provide some financial respite, then this is possible. The individual should formally notify their who can mark the individual as being on a ‘payment holiday’ when submitting both a £0 employee and employer monthly submission. Employers should however take care so not to actively encourage this which also results in an employer contribution saving.

The content of this article is for information only and does not constitute formal financial advice.

This material is for general information only and does not constitute investment, tax, legal or other forms of advice. You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation.

Contact our Financial Planning team on +44 (0)1227 768231 or provide your details on our online enquiry form if you would like to discuss workplace pension schemes or employers legislative duties further.

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