With staff working from home and businesses under financial pressure from the Coronavirus lockdown, the government has provided two vitally important measures to support workplace pensions during this crisis.
The first provides support for employers to meet automatic-enrolment contributions for workers. Grants paid to employers under the Coronavirus job retention scheme cover 80% of the costs of employment up to an overall cap of £2,805 per month, per employee. That includes wages, plus employer’s national insurance (NI) contributions and the minimum employer pension contribution of 3% of qualifying wages required under automatic-enrolment.
The Pensions Regulator (TPR) has also offered reassurance that it will allow some flexibility for employers to suspend or reduce deficit recovery contributions for up to three months as scheme sponsors battle the economic downturn arising from the pandemic.
Under exceptionally challenging circumstances, savers can be reassured that employers are being supported to continue to contribute to their pension and that pension schemes across the UK are putting in measures focused on supporting savers and paying pensions during this difficult time.
As share markets adjust to the economic challenges posed by Coronavirus, staff may wonder what it means for their pension. Employers can reassure savers that the most prudent action they can undertake now is to stay the course. There are different challenges for those approaching retirement, who may benefit from delaying drawing their pension if they can afford to.
We suggest employers hold seminars to educate staff about their pensions. In the current environment, it is especially important for people to understand the benefits of saving through a workplace pension.
Nigel Peaple is director of policy and research at Pensions and Lifetime Savings Association (PLSA)