Pensions - Articles - How auto enrolment applies to furloughed employees

 Steven Cameron, Pensions Director at Aegon said: “While these are challenging times for many employers, auto-enrolment has been a runaway success and even a temporary disruption to it, could have long-term implications for the nation’s savings. As a result we welcome the fact that the Department for Work and Pensions (DWP) has confirmed that for now, automatic enrolment will not be suspended during the coronavirus crisis. For employees who are working normally, this means that employers should continue to pay their own contributions and forward any employees’ pension contributions to the chosen pension provider. 

 “There are special provisions for those ‘furloughed employees’ whose employment has been temporarily put on hold. If an employer is claiming for assistance from the Government to cover wages under the Coronavirus Job Retention Scheme, then they can claim 80% of a furloughed employees’ usual monthly salary up to a cap on the claim of £2,500 per month. On top of this, they can also claim the associated employer’s National Insurance contributions and 3% of qualifying earnings for minimum auto-enrolment employer pension contributions. This means furloughed employees will continue to benefit from employer contributions of up to £75 a month.

 “The DWP has also confirmed they anticipate that employees will continue to make pension contributions from their salary (whether they are working normally or on furlough) to help them save for retirement. They do acknowledge that employees have an option to choose to stop paying although this is likely to result in the cessation of employer contributions too.”