Although the world has changed drastically over the past few months some things have not changed. We still have to pay our taxes, I still chug a bottle of wine each night, and your automatic enrolment (AE) duties have remained the same. These include your re-enrolment and re-declaration duties and paying contributions. This is the case regardless of whether your business is availing of a government grant or not.
But what happens if you find yourself struggling to make pension contributions? Which would not be surprising during the current economic climate when cash flow and resources are virtually non-existent. Well, employers with furloughed staff were already able to claim employer pension contributions on the wages included as part of the grant received under the Coronavirus Job Retention Scheme up to the lower of the statutory minimum AE employer contributions for claims. However, this ended in August; and going forward, employers now need to foot the bill again.
If you think you may not be able to make your pension contributions, The Pensions Regulator advises you should contact your pension provider to see if there is flexibility to choose the due date for payment or whether they may be able to help you plan to pay your contributions over a longer period of time.
Another option is to reduce your employer contributions to the statutory minimum if you haven't already done so. If you use a DC scheme and pay more than the minimum, then you may be able to decrease to the statutory minimum but not below. If you do decide to decrease then by law you are required to consult on certain changes in accordance with a number of rules and the consultation period must be 60 days. The good news though is that if you have less than 50 employees you are not required to consult.
There are a number of factors to consider if you decide to decrease, both legal and HR-related, but instead of boring you to tears, you can find the full list on The Pensions Regulator’s website. Have a cup of coffee ready.
There are some cases in which an employer’s pension contribution may be less than the AE statutory minimum employer contribution. For example, if a furloughed worker reduced their contribution to 2% and the employer matched it. In such cases, you are only able to claim the amount you are actually matching and not the minimum contribution itself (3%).
Furloughed staff members can ask to be enrolled into your workplace pension scheme at any time, including whilst on furlough. Once requested in writing, you have one month to complete their request. You will have to pay into the pension scheme if the employee is aged 16-74 and they earn at least £520 a month or £120 a week, so this will still apply to many furloughed staff.
But as always, if in doubt seek professional help (something I’m never short of hearing). You can contact The Pensions Regulator who should be able to help you manoeuvre through the quagmire.