Pensions Regulator updates guidance in relation to CJRS changes

The Pensions Regulator (TPR) has published updated COVID-19 guidance for employers in recognition of the fact that, from 1 July 2020, staff may be furloughed on a flexible basis, and permitted to return to work part-time for their employer. It also considers that, for claims commencing on, or after, 1 August 2020, employers no longer have the option to claim a grant for up to the statutory minimum automatic enrolment (AE) employer contribution.
For individuals who are working for some of the hours in a claim period but are also being furloughed for a proportion of hours in July 2020, employers will need to calculate the total pay, and pay this via the normal payroll process. Both employee and employer pension contributions must be calculated on this total amount of pay. To illustrate, if an employee earned £100 for hours worked and adjusted furlough pay of £50 for furloughed hours within the claim period, then £150 must be processed through payroll, and pension contributions under the employer’s pension scheme rules must be based on the full £150.

Employers will need to be aware of the amount of furlough pay that is included in the total pay for the pay period as it is only on that amount, that they may claim a grant for up to the statutory minimum employer pension contribution. To use the previous example, employers will only be able to claim a grant of up to the statutory minimum AE employer contribution on £50 as that is the amount of pay that relates to furloughed hours.

For claims starting on or after 1 August 2020, employers no longer have the option to claim for the employer pension contribution figure on furlough pay.

Employers must continue to pay employees who are on furlough the lower of 80% of their reference wage or salary, or £2,500. The government will still fund this 80% for claims relating to August, but will fund 70% in September 2020 and 60% in October 2020. Employers will be required to ensure that employee pay remains at 80%, or £2,500, if capped, so will need to contribute in September and October to bring employee pay up to 80%. Pension contributions should be calculated and paid across on the full amount of pay but employers cannot claim any of this back through the Coronavirus Job Retention Scheme (CJRS).

Employers will be required to pay more than the statutory minimum contribution if their worker is working part-time during the furlough period, for July 2020 only. Where this is the case, any contributions over the AE statutory minimum contribution will not be funded by the CJRS. Employers should, however, carry on making the correct contributions due under the scheme, and so will be required to pay a portion of the pension contribution themselves.

The information in this article is accurate at the time of publication.


We use cookies and similar technologies to enable services and functionality on our site and to understand your interaction with our service. By clicking accept, you agree to our use of such technologies for marketing and analytics.​