Coronavirus and Pensions Consultations

The requirement under existing pensions legislation to consult on certain changes, such as reductions in the amount of contributions being made, applies to all employers who have at least 50 employees. Usually the minimum period for consultation must be 60 days, however the Pensions Regulator has now confirmed that of all of the following points below, they would not take any regulatory action in respect of failure to consult for the full 60 days:

  1. You have furloughed staff for whom you are making a claim under the Coronavirus Job Retention Scheme (“CJRS”).
  2. You are proposing to reduce the employer contribution to your defined contribution pension scheme, in respect of furloughed staff only (for staff who have not been furloughed the existing pension contribution rate will continue to apply).
  3. The reduced contribution rate for furloughed staff will only apply during the furloughed period after which time it will revert to the current rate.
  4. You have written to your affected staff and their representatives to describe the intended change in the effects of the scheme and on your furloughed staff

The Pensions Regulator has stated this will be maintained until the 30 June 2020 and will be under constant review as matters progress, if all of the above four points cannot be met the Pensions Regulator's expectation is that a full consultation requirement must take place.The above will be particularly helpful where employers are furloughing staff and as a result are either using salary sacrifice, or making payments that are more generous than the amount prescribed under the furloughing provisions (effectively qualifying earnings minimum at 3%). This should allow employers an opportunity to reduce the amount of employer contributions and ensure that their pension costs are covered by the CJRS. Obviously, the points above and the ability to make a reduction in the amount of pension contribution, is still subject to both the employment contracts and employment consultation requirements, and in some cases, subject to the rules of the particular scheme to which pensions contributions are made. Employers would have to give consideration to these points before making any reduction.For more information please contact Kim Jones

If you would like to talk through the consequences for your business, please email us and one of our team will get in touch.


The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.