Coronavirus – Questions and Answers for Employers
Employers in any doubt over the legal situation should seek their own legal advice. In no way should this be construed as legal advice and we accept no liability for decisions you may make.
Given the difficult conditions that we are working under, am I still expected to pay pension contributions for my staff?
We appreciate how difficult the business environment has become, and how this is affecting thousands of employers across the UK.
The UK Government has not announced any changes to the existing Automatic Enrolment legislation. For this reason, all employers continue to be obliged to make contributions in respect of all relevant earnings that they are paying to their staff, and to pass both employer contributions and employee contributions across to their pension provider.
Could I take a break from paying pension contributions on behalf of my employees?
Once again, there has been no change in the UK Government’s legislation. In order to comply with the legislation, you will need to continue to pay contributions, and to pass these across to your pension provider.
I have no contributions to submit, what do I do?
Salvus still requires a submission for each pay period.
If you have no current employees/members, a declaration confirming this will be available when submitting data.
However, if Salvus has records of current employees and/or members, the declaration will not be available. A payroll data file is therefore required, if there are no earnings, nil earnings and contributions should be submitted.
Will I be reported to The Pensions Regulator if I am late submitting data?
The reporting requirements have not changed: however, the Pensions Regulator has stated:
“We know this is a challenging time for everyone and we recognise the strain this is putting on employers.
We will take a proportionate and risk-based approach towards the enforcement of decisions, in light of these challenging times, with the aim of helping to get employers back on track and supporting both employers and savers.”
The Pensions Regulator has issued COVID-19 guidance for employers here.
Salvus is required to enforce legislation and the scheme rules, neither of which currently allow for contributions to be delayed or less than the workplace pension quality requirements. To adapt these requirements would require legal changes as well as significant development work at a time when resource is not at full capacity and working remotely.
Therefore, for the foreseeable future Salvus must continue to monitor contributions in the usual manner. This is unlikely to be welcome given the unprecedented circumstances, however, it is the only way all parties can be protected; the employer by ensuring their obligations are met, employees rights being protected, as well as Salvus and its ability to continue to provide employers and employees with a compliant workplace pension.
I plan to take advantage of the Government’s ‘Furlough’ scheme, what are the implications?
Our understanding of the way that the Coronavirus Job Retention Scheme will work is that employers should continue to pay their staff whilst they are not working, and then make a claim from the UK Government.
Employers may claim up to 80% of salary per month, capped at £2,500, plus employer National Insurance and minimum Automatic Enrolment pension contributions of 3% can be added to this, which gives an absolute cap of £2,805. The employer may top up the employees pay to full pay.
Any employees still working, whether with partial or full salary, cannot take part in the scheme.
The UK Government has made it clear that whenever employers pay employees, whether that be in conjunction with Furlough claims or not, this pay will continue to be subject to Automatic Enrolment legislation, and contributions should therefore be paid to the pension provider.
Am I able to stop or decrease pension contributions in respect of my employees, with the intention of catching up in the future when the business environment recovers?
There is no allowance for this under the Automatic Enrolment legislation. For the time being, employers are obliged to pay Automatic Enrolment contributions on all relevant payments to employees.
If pay is wholly or partially postponed, and therefore pension contributions are as well, when pay is subsequently paid it should be deemed as relevant earnings and pensionable as if paid at the correct time.
The employees are paying contributions through salary sacrifice, what impact does that have?
Salary sacrifice (also known as salary exchange) is a contractual agreement between an employer and an employee. The agreement forgoes salary for an equivalent non-cash benefit, one option being in exchange for employer pension contributions.
Note: for Furloughed staff the post sacrifice salary is the claim amount, limited as mentioned above, and only the employer’s minimum contribution requirement of 3% can be claimed. The employer would be responsible for the employee contribution due to the salary sacrifice agreement.
Are my employees able to temporarily opt out of the pension scheme?
Employees are allowed to cease their pension scheme membership at any time. However, there is strict legislation which prevents employers from encouraging their staff from opting out or leaving their scheme.
Employers are obliged to allow employees to opt back in should they wish to do so, unless a previous request to opt in was received in the last 12 months. Given the current circumstances we would encourage employers to facilitate employee wishes where possible.
If I am taking on new staff, am I still obliged to enrol them into the pension scheme?
You are. The UK Government has not suspended its legislation, so any new staff should be sent pension communications in exactly the same way as usual and enrolled into the pension scheme in exactly the same way as usual.
Some of my staff are off sick, what do I do?
Statutory Sick Pay (SSP) forms part of their relevant earnings if they are already a member of the pension, if the pensionable salary is:
- Qualifying Earnings, pension contributions are due on earnings between the Lower and Upper Earnings Limit including SSP; or
- any other definition, pension contributions are due on the whole of SSP.
If they are not a member, Automatic Enrolment regulations require them to be assessed each pay period and should they meet the enrolment criteria, they need to be automatically enrolled.
I laid all my staff off – what should I do?
All employees that have been laid off should be submitted as leavers in the normal manner.
Please note that the above reflects our current understanding of the situation. We will attempt to keep this document up to date with developments as the Coronavirus situation moves forward.