Yet having made these record smashing decisions, the government departments, along with The Pensions Regulator (TPR), had the difficult challenge of working through the detail and the impact it has on employers and their employees.
Given the scale of the challenge, it’s no surprise that many employers are wondering how to manage their business through this crisis and do the right thing for their employees.
Pensions may not have been at the top of the priority list. However, both the Government and TPR have confirmed that automatic enrolment legislation will stay as it is.
Employers should keep on going
Firstly, this means your workplace clients will need to keep enrolling eligible jobholders into their pension scheme. They'll also need to carry on calculating and paying contributions as normal. And whilst the regulator has indicated they may be more pragmatic and flexible in their enforcement regime at this difficult time, it’s clear they’re still expecting contributions to be made.
Although the Job Retention Scheme portal is open and some payments have already been made, we know there are some employers who are struggling to make their contributions right now, due to the gap between when the contributions need to be paid and when the payments are received from the Job Retention Scheme.
If your workplace clients find themselves in this situation, here's a few steps to follow which could help minimise problems further down the line:
- Keep assessing the workforce and calculating contributions – even if they can’t afford to pay the contribution now. The regulator will still expect eligible employees to be enrolled into the pension scheme, and the usual enrolment information and opt out rights will need to be issued.
TPR will also expect the right contributions to be paid, even if they’re delayed. If your workplace clients do this as they go and keep good records, it will save them lots of work in the long run. It also helps us, or any trustees, keep the scheme records up to date.
- Communicate with employees – it's important to communicate with employees, particularly when their pay or benefits, including pension contributions are being altered.
For example, if workplace client's currently paying more than the minimum employer contribution and they're considering reducing this, they'll need to let employees know in advance.
There’s usually a formal consultation process around this for larger employers, however the regulator has relaxed this just now and issued guidance instead. Changing employment rights, including any salary exchange agreements can be a complex area in contract and pensions law and getting financial or legal advice can help.
- Get help and support, don’t just stop direct debits. If your workplace clients are concerned about making their contributions, they should speak to you or get in touch with Royal London.
We can work with you and your client to agree a payment plan which could help bridge the gap between when the contribution's due to be paid and receiving their grant from the scheme. This will help keep them onside with the regulator, help them plan effectively and save time and effort in future. If the scheme has trustees or an employee representative committee, it's also worth speaking to them.
- If in doubt, speak to TPR. It’s best to make the regulator aware of any issues as they should be able to advise your client on the best course of action.
This is clearly a difficult time for everyone, and given the restrictions, it can feel isolating too. If your workplace clients need support, they can contact TPR. We're also here to help where we can.