As uncertainty continues, businesses are considering the implications this has on their auto-enrolment responsibilities.
Below we have pulled together some FAQs relating to the implications of defined contribution pension schemes.
You may also be receiving queries from employees concerned about the drop in the value of pension savings (please see our other blog on investments here).
If the current situation means employers can’t make their pension contributions on time, what are are their options?
We appreciate that current circumstances will be challenging for employers, however until The Pensions Regulator (TPR) tell us otherwise, employers should try to make their pension contributions as soon as they can.
If employers are concerned about whether they can meet their ongoing duties, we suggest they speak to TPR.
Can employers put their scheme on a contribution holiday?
TPR haven’t given a definitive view as to whether employers can apply a contribution holiday to their scheme. We would however encourage, where possible, for employers to continue to make contributions as normal.
Again, if employers are concerned about whether they can meet their ongoing duties, we suggest that in the first instance they speak to TPR.
Should employers continue making pension contributions if employees who are members of the scheme are off sick?
Yes. Employers will need to continue deducting contributions from the members’ salaries. Statutory Sick Pay is part of the qualifying earning rules for automatic enrolment.
Do employers still need to make pension contributions if employees take unpaid leave?
No, as long as the employer is not paying any salaries, then they wouldn’t need to make any pension contributions.
If employers need to reduce salaries, do they still need to make the pension contributions?
If the salary has been reduced, any pension contributions that the employer makes should be in line with the revised salary. It is important employers check that any reduced pension contributions are still conforming with any specific arrangements they have with employees.
What should employers do if any members want to stop paying into their pension?
Employees of a defined contribution pension scheme are entitled to stop and restart their contributions at any time.
Automatic enrolment rules also give employers the option of stopping their contributions. However, depending on the scheme’s rules for occupational pensions schemes, or contracts of employment, there may be a legal obligation for employers to continue pay into them.
Question: What should employers do if any members stop paying into their pension, but they want to continue contributions?
If the member’s contribution stops, employers will need to stop deducting contributions from their salary. Employers will need to check to see if there are any conditions that apply to minimum/matching contribution amounts within their employee contracts. They also need to ensure they update their schedules to reflect the new contribution.
Question: If the employers are taking on any new employees, should they continue to enrol them into the scheme?
Yes. Until TPR provide any other advice around new joiners, employers should continue to enrol any new employees into the scheme in the normal way.
Question: Can employers change the certification basis of their scheme?
If the scheme’s contribution basis meets the statutory minimum requirements, yes they can change the scheme’s basis. If an employer makes a change, they’ll need to let their pension provider know, as well as keep a record of this, as evidence for TPR. They will also need to inform their employees.
If you have any queries please do not hesitate to get it touch with a member of our team today on 01254 679131.
This information is correct as of 26 March 2020. This blog is for general guidance only. Recipients should not act upon any of the information provided without seeking specific professional advice tailored to your circumstances, requirements or needs. Please contact PM+M before making any decisions based on any matters relating to this blog.