Workplace Pensions and Salary Sacrifice During Coronavirus Lockdown
Published / Last Updated on 06/05/2020
The Pensions Regulator has warned that employees and employers must continue to pay into workplace pensions as normal during the coronavirus period with regard to staff that are in furlough.
Furloughed staff are being funded by up to 80% of pay by the government. This is pay and therefore pensions contributions are still deductible and payable by both employer and employee.
If pension contributions are paid based upon a % of pay then contributions can be reduced. If pension contributions are a fixed amount then the full, fixed amount must still be paid unless contractually agreed between employer and employee.
Salary sacrifice
Furlough pay 80% is based upon POST sacrifice pay only. If you have sacrificed part of your salary i.e. agreed a lower salary with the sacrificed pay to be paid into the pension then this must still continue to be paid by the employer. It cannot be reduced based upon the 80% furlough pay as the sacrifice does form part of the 80% furlough pay grant. It can only be reduced if:
- The employee requests a reduction of the sacrifice or
- It is part of the salary sacrifice agreement that it can be reduced.
If in doubt contact the Pensions Regulator or read https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/automatic-enrolment-and-pension-contributions-covid-19-guidance-for-employers/covid-19-technical-guidance-for-large-employers
