Understanding pension responsibilities as an employer following coronavirus

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Updated: 4th February 2021

Over the last few months the coronavirus pandemic has created huge uncertainty for employers and their staff regarding the ability to operate normally, and the potential for wide scale job losses.

Employment costs can often represent the highest outgoings for employers, and the responsibility of keeping their staff on the payroll whilst simultaneously experiencing huge financial and trading losses, is heavy.

So what are your employer responsibilities as far as workplace pensions are concerned, and is there any direct help available in this respect?

What are your pension responsibilities as an employer following coronavirus?

You must continue to make the minimum contributions to your employees’ workplace pensions, even though few businesses are actually trading due to the ongoing coronavirus outbreak.

To help you deal with the huge impact on your business and retain staff during the next three months, the Chancellor has introduced a package of measures to help you, including the Coronavirus Job Retention Scheme.

The scheme is aimed at supporting employers and the economy by preventing mass job losses due to the inability of businesses to operate. It could be extended from the stated three months if necessary depending on the situation in the next few weeks.

How does the scheme help with employer pension responsibilities?

The Coronavirus Job Retention Scheme is designed to help retain employees by providing up to 80% of an employee’s wages whilst staff are ‘furloughed’ – allowed leave of absence because of the outbreak.

These payments from the government are intended to cover all employment costs including employer National Insurance Contributions and your employer pension contributions that are required under ‘normal’ conditions. They are vital as far as making employer pension contributions is concerned, and ensure your employer responsibilities can be met.

Making employer pension contributions following coronavirus

As far as pension contributions are concerned, as an employer you continue to be responsible for paying the minimum contribution of 3% of your employees’ qualifying wages under auto enrolment rules.

If you decide to pay more than 3%, you can’t recover the cost of the additional sum under the Coronavirus Job Retention Scheme. You’re legally required to continue with the minimum pension contributions, and cannot opt out any of your employees without their agreement.

The only way an employee can be opted out of a workplace pension scheme is by doing so themselves in writing – you aren’t allowed to encourage or enforce this to save money.

Seeking professional advice on employer pension responsibilities and coronavirus

The situation we’re facing is fast-moving, and new government advice and measures are ongoing. It can be difficult to keep up with the latest guidance when you’re struggling to keep a business going, however, which is where professional advice is invaluable.

The Coronavirus Job Retention Scheme provides up to 80% of employee wages, capped at £2,500 per month per employee, plus the associated costs of employment – employer National Insurance Contributions and the statutory minimum employer pension contributions under automatic enrolment.

What if you don’t meet your pension responsibilities as an employer?

Employers unwilling or unable to make pension contributions will continue to be formally reported to the Pensions Regulator, but the timescale where reporting to the Regulator needs to be made has been extended from 90 days to 150 days - this provides a little extra time for you to bring your payments up to date if necessary.

The Pensions Regulator has stated they will “take a proportionate and risk-based approach towards the enforcement of decisions, in light of these challenging times, with the aim of helping to get employers back on track and supporting both employers and savers.”¹

For reliable guidance on your pension responsibilities as an employer following coronavirus, please get in touch with our team of specialists for a free same-day consultation. Real Business Rescue is a major part of Begbies Traynor, the UK’s largest professional services consultancy – we can ensure you understand your legal obligations as an employer in all respects.

Keith Tully


0800 644 6080
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