How do pension contributions work under the Coronavirus Job Retention Scheme (CJRS)?

If you’re using the Coronavirus Job retention Scheme (CJRS), you should continue to run your payroll as normal, but pension contributions work a little differently. You can find more information about the coronavirus scheme on the government’s website, including a step-by-step guide to claiming and a calculator.

It’s important you continue contributing to your employees’ pensions and assess your workforce each pay period.

However, employers cannot claim employee contributions from the government under CJRS. Employees should continue to pay contributions as per the legal minimums, or whatever is set out in their contract. Read more about what to do if your employee asks to reduce or stop their contributions.

What contributions do employers need to pay?

  • Contributions should continue at the same rate as before.
  • Even if you’re claiming employer pension contributions through CJRS, you should continue to work out contributions based on the amount the employee is being paid.
  • You should continue to apply the earnings threshold if you’re using qualifying earnings to work out pension contributions. If the employee’s earnings fall below the lower earnings threshold (£520 per month), contributions may not be necessary.

The Pensions Regulator has provided guidance for employers that use salary sacrifice/exchange on their website.

Can employers claim for more than the minimum contributions?

CJRS isn’t funding more than minimum contributions. But you should continue to make the agreed contributions, and you should still pay any contributions above the minimum levels yourself.

What happens in July 2020?

From July, employers can bring furloughed employees back to work on a part-time basis as long as the employee was furloughed for 3 consecutive weeks before the end of June 2020.

This change means:

  • You should continue contributions at the regular agreed amount.
  • Only employer pension contributions for the hours the employee has been furloughed for can be claimed under CJRS. Therefore, you’re responsible for paying full contributions on the hours they’ve worked.
  • Employees should continue to contribute based on their full pay (regardless of hours actually worked).

What happens in August 2020?

From 1 August 2020, employers can no longer claim employer pension contributions under CJRS. So, both the employer and employee must continue to pay the minimum contributions in full.

Pension contributions under CJRS Before 1 July 2020 July 2020 1 August 2020 onwards
Employer contributions Can be claimed up to the minimum AE contribution levels Can only be claimed on the hours the employee is furloughed, up to the minimum AE contribution levels  

Cannot be claimed

Employee contributions Payable in full, deducted from employees’ wages (including furlough pay). Cannot be claimed under CJRS

Need more help?

More information about the CJRS and pension contributions can be found on The Pensions Regulator’s website.

Find out what to do if you’re struggling to make pension contribution payments.

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