Coronavirus Job Retention Scheme—the pensions implications
Coronavirus Job Retention Scheme—the pensions implications

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Coronavirus Job Retention Scheme—the pensions implications
  • What is the CJRS?
  • Pensions coverage of the CJRS until 31 July 2020
  • Ongoing duty to make pension contributions
  • Calculation of pension contributions during flexible furlough (July 2020)
  • Payment of pension contributions from 1 August 2020
  • Impact on salary sacrifice arrangements
  • Interaction with automatic enrolment duties
  • Can pensions contributions be reduced to the legal minimum?
  • What if the employer ends up paying less than the automatic enrolment statutory minimum?
  • More...

What is the CJRS?

At Spring Budget 2020, the government announced several measures to help businesses face the coronavirus crisis (eg suspending business rates).

One of these measures is the ‘Coronavirus Job Retention Scheme’ (CJRS), which is a temporary scheme open to UK employers that had created and started a PAYE payroll scheme on 19 March 2020 (extended from 28 February 2020) and which applies to staff furloughed on or before 10 June 2020. The CJRS is in operation from 1 March 2020 until 31 October 2020. It is designed to support employers whose operations have been severely affected by coronavirus and which would otherwise have to make redundancies.

Under the CJRS, if the employer cannot cover staff costs due to coronavirus, they may be able to claim the following:

  1. until 31 July 2020, 80% of a worker’s wages, up to a monthly cap of £2,500, plus employer National Insurance contributions (NICs) and pension contributions—the value of the pension contributions that can be claimed under the CJRS until 31 July 2020 is discussed in What pension contributions are covered by the CJRS until 31 July 2020? below

  2. in August 2020, just 80% of a worker’s wages, up to a monthly cap of £2,500. Employer NICs and pension contributions are no longer covered by the CJRS from 1 August 2020, so that the employer will have to pay

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