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Update From The Pensions Regulator

14th April 2020

You must continue with your automatic enrolment duties as normal, for both working and furloughed employees, however, the new guidance from The Pensions Regulator outlines flexibilities available to employers during this time.

Under previous rules, pension providers must inform The Pensions Regulator when contributions are more than 90 days overdue. This has now been increased to 150 days to allow employers more time to bring contributions up to date. Please let us know if you are struggling to pay your contributions.

Your employees are able to choose to reduce their contributions or opt out of the pension during this time if they decide this is the right option for them, but you must not encourage your employees to do so.

Your existing pension and payroll processes should carry on as normal if you are using the Coronavirus Job Retention Scheme. The minimum automatic employer contribution (3%) will be calculated on qualifying earnings, so if you pay above this (employers that pay more than 3% or if you calculate contributions on basic pay/total earnings), you will also need to calculate the 3% of the qualifying earnings for your furloughed staff as part of the process for making the claim – this is in addition to you existing pension contribution calculation not instead of it.

If you are currently paying above the minimum statutory employer contribution you may be able to decrease your contributions down to the statutory minimum for furloughed workers, although you cannot reduce the contributions to below the statutory minimum. We are currently waiting for pension providers to release their guidance on whether they will allow employers to reduce their contributions down and will update you accordingly. In the meantime, if you think you would like to reduce your employer contributions down to the statutory minimum then please let us know as soon as possible.

The regulatory easement from The Pensions Regulator is intended to be maintained until the 30th June 2020 although this date will be reviewed as matters progress.

Covid-19/Coronavirus Job Retention Scheme Update

The Government has released further guidance on the Coronavirus (COVID-19) Job Retention Scheme.

We thought that it would be useful to summarise parts of the updated guidance:

What can or can’t be included when calculating wages?
– Employers can now include past overtime, fees and compulsory commission payments
– Employers should not include discretionary bonuses, tips, discretionary commission payments or non-cash payments (such as the value of benefits in kind)
– Employers that provide benefits through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should not be included

Can employees be furloughed multiple times?
– Employers can furlough their employees multiple times, so long as each furlough period is for a minimum of 3 consecutive weeks.

Who can be furloughed?
Any non-key worker can be furloughed, which includes the following:
– Apprentices
– Domestic staff
– Employees that are shielding in line with NHS advice
– Employees with caring responsibilities (such as looking after children)
– Employees on fixed term contracts
– Company Directors

Making a claim
The online service won’t be available until the end of April but in the meantime, employers that will be claiming should ensure they have done the following:
– Enrolled for PAYE online (this can take up to 10 days to be processed so the quicker this is done, the better)
– Written to all employees that have been furloughed, confirming the decision. If you are furloughing an employee multiple times, you should write to them each time to confirm. These agreements must be held on your records for a minimum of 5 years.

You’ll need to provide the following to make a claim:
1. The bank account number and sort code you’d like us to use when we pay your claim.
2. The name and phone number of the person in your business for us to call with any questions.
3. Your Self-Assessment UTR (Unique Tax Reference), Company UTR or CRN (Company Registration Number).
4. The name, employee number and National Insurance number for each of your furloughed employees.
5. The total amount being claimed for all employees and the total furlough period.

Obviously, there are still areas where questions remain and we will continue to update you as and when further guidance is released.

You can read the full guidance here https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.

Changes to The People’s Pension Charging Structure

To help shield against the ongoing impact of Coronavirus, The People’s Pension have added a new annual charge.

The new annual charge is £2.50 – equivalent to just 21 pence a month – for all members of The People’s Pension. Given the current volatile financial climate, they will deduct this annual charge from members’ pension pots later in the scheme year.

How it will work

With effect from 1 April 2020, members of The People’s Pension will pay an annual management charge (AMC) made up of:
an annual charge of £2.50, paid each year, deducted during the scheme year (which runs from 1 April to 31 March)

a management charge of 0.5%
and, depending on how much is in their pot, they may receive:
a rebate on some of the management charge – the starting point will reduce from £6,000 to £3,000 around the time when they take the annual charge, meaning more members will benefit sooner.
The People’s Pension have added a template letter to their website to allow you to communicate this change to your employees.