The Pensions Regulator’s guidance for employers on AE and DC pension contributions for furloughed employees

Posted: 12/05/2020

On 6 May 2020, the Pensions Regulator (TPR) added information for employers on auto-enrolment (AE) for furloughed employees into its general Covid-19 guidance. 

TPR’s key pointers for employers are:

• as for other employees, AE duties for furloughed employees apply as normal, and the employer should assess employees’ eligibility for AE based on the amount of pay the employees actually receive. This means that if the employer is to reduce employees’ pay, the employer should assess the employees based on the reduced pay;
• if an employee meets the criteria for AE, the employer must enrol the employee whether or not furloughed (or use the postponement easement, which postpones putting newly eligible staff into a pension scheme for up to three months);
• if the employer is to reduce a furloughed employee’s pay to the amount that can be claimed as a grant under the Government’s job retention scheme, the employer will only have to put the employee into a pension scheme for the first time if either (i) they turn 22 (the threshold for the age criteria for AE) during the furlough period and their earnings in their pay period meet the earning criteria for AE or (ii) the employer chooses to apply postponement, the postponement ends during the furlough period and the employee meets the criteria to be put into a pension scheme at that point;
• the effect of reducing a furloughed employee’s pay may mean that the employee will never meet the criteria to be put into a pension scheme during the furlough period. When their pay increases after the furlough has ended, the employer must continue to assess them and enrol them if they are eligible; and
• for employees who have opted out of AE so far, if the employer is to reduce furloughed employees’ pay and the requirement to re-enrol arises during the furlough period, some of those employees may no longer meet the criteria to be put into a pension scheme. The employer should next assess these employees for AE in three years’ time, but the employees can ask to be put into a pension scheme before then.

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