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Pensions and the Coronavirus Job Retention Scheme: what employers and trustees should know

14 May 2020

The government's Coronavirus Job Retention Scheme (CJRS) has thrown a lifeline to many employers and to their employees who might otherwise have lost their jobs in the current Covid-19 crisis.  For employers taking advantage of the CJRS (and the trustees of an employer's pension scheme), the scheme gives rise to several pensions-related issues, in particular:

  • how pension contributions should be calculated;
  • dealing with salary sacrifice arrangements;
  • reducing contributions to the auto-enrolment minimum;
  • auto-enrolment duties in respect of furloughed employees;
  • the impact on benefits from open defined benefit (DB) schemes;
  • the position of furloughed trustees; and
  • life assurance benefits.

Our attached note sets out our current understanding of how these issues may be addressed, based on the recently issued Direction from HM Treasury and updated guidance from HMRC and the Pensions Regulator. 
 
Partial return to work

This note is based on the position at 14 May 2020, with furloughed employees prohibited from carrying out any work for their employer.  The Chancellor announced on 12 May that from 1 August this year furloughed workers will be able to return to work part-time, with their pay funded partly by the furlough scheme and partly by their employer.  No details are yet available but the changed arrangements are likely to cause further issues relating to those employees' pension arrangements.  We will update this note as further information becomes known.‚Äč


For more information or to discuss any issues raised in this client note, please speak to your usual Hogan Lovells contact or one of the pension partners.

To read our client note, please click here


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