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Subject to scheme documentation, the Pensions Regulator (TPR) has confirmed that employers can change the level of contributions payable to pension arrangements in certain circumstances. TPR has also reiterated the advice to employers who are experiencing difficulties in paying contributions to discuss this with their advisers and their provider to explore what options are available before stopping payments.
Under normal circumstances, employers seeking to reduce their contribution or increase the employees, other than in line with statutory requirements, would have to undergo a period of “consultation” with employees lasting a minimum of 60 days. This requirement is set out in:
Unless otherwise excluded, the duty to consult applies to an employer with at least 50 employees in Great Britain in relation to “listed changes” (ones which affect future pension arrangements) as defined in the main regulations. The full guide can be found by visiting the pensions regulator.
TPR issued an important update on the consultation process last week. Whilst the legislation has not changed, where an employer with more than 50 employees is proposing a reduction in their contribution or an increase in their employees, TPR has confirmed no action will be taken where a full 60-day consultation does not take place. This is provided the following is satisfied:
This easement will be maintained at least until 30 June 2020. As much consultation as possible should therefore be carried out. However, if changes are to be made permanent, or are to be applied to all staff, the full 60-day requirements will apply.
TPR has confirmed that there are no changes to the AE regulations. Furloughed workers remain employees and are therefore subject to the AE requirements. This includes re-enrolment and declaration of compliance procedures, with failure to carry out re-enrolment and declaration process resulting in automatic fines.
Note: Under the Coronavirus Job Retention Scheme, if an employer makes a claim for a grant (to cover the lower of 80% of the furloughed worker’s salary or wage or £2,500 per month), the employer will also be able to claim the statutory minimum employer pension contribution on those wages. This is 3% of qualifying earnings, which are the wages in excess of £520 per month – for example if the claim is for £2,500, the claim for pension contributions will be £59.40 (0.03 x (2,500 – 520)).
If you would like any more information on these matters, please contact your Ascot Lloyd consultant/contact directly.
Note: The content of this Pensions Briefing should not be deemed as advice. No section of this Pensions Briefing, reporting or data should be considered a client specific, or a personal client recommendation.
Advising on and arranging of occupational pension schemes is not regulated by the FCA. Arranging group personal pensions (GPP) and group stakeholder pensions (GSP) (which are not occupational pension schemes) may be deemed to be a regulated activity by the FCA once members start joining the scheme.