Pensions - Articles - Aegon comment on the latest guidance for employers from TPR

ommentary from Aegon’s head of pensions, Kate Smith, on the latest guidance for employers from the Pensions Regulator (TPR).

 Kate Smith said: “In its new guidance the Pensions Regulator has confirmed that employers’ auto-enrolment duties will continue as normal during the COVID-19 crisis. Employers must continue to pay, at least, the auto-enrolment minimum contributions on earnings. As before, employers must not encourage or coerce employees to opt out of pension saving.

 “Some employers may pay more than the 3% auto-enrolment minimum and may be looking to reduce their contributions to help with cash flow. It is possible to do this, subject to contractual obligations, but employer contributions can’t be reduced to below the 3% minimum. In normal circumstance, employers with more than 50 employees, have to consult on reductions in employer contributions for a minimum of 60 days. The Pensions Regulator has waived this requirement temporarily for furloughed employees only, and only if certain conditions are met. The reduction can only apply during the furlough period, and higher contributions must be reinstated at the end of this, and the affected employees and their representatives must be informed of this change.

 “This easement doesn’t apply to non-furloughed staff. Employers must continue to consult for at least 60 days if they intend to reduce their contribution rates. If employers fail to do this, the Pensions Regulator will take regulatory action, including demanding backdated contributions at the higher level and issuing fines.

 “We welcome this pragmatic and proportionate easement in these extremely challenging times for employers who have made the decision to furlough their employees. This regulatory easement ends on 30th June, but the regulator will keep this under review.”

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