The latest government guidance provides that where employees are furloughed, employers can claim for pension contributions to an employer’s scheme and that is not limited to employer pension contributions made by way of auto-enrolment. 

The level of contributions that can be claimed under the Coronavirus Job Retention Scheme (CJRS), in addition to salary and National Insurance contributions, is the same level as the minimum automatic enrolment employer contribution, namely three per cent. However, grants for actual pension contributions to an employer’s scheme can only be claimed up to this cap where the employer pays the whole amount claimed to a pension scheme for the employee as an employer contribution.

The Pensions Regulator has also provided guidance for employers who are making a claim under the CJRS with regard to their pension obligations.

Payroll processes

The Pensions Regulator guidance clarifies that employers should calculate and pay across pension contributions as normal. However, they will also need to calculate three per cent of the qualifying earnings of staff who have been furloughed as part of the process for making the claim for the total grant under the CJRS.

Employers should not, therefore, make any changes to their existing pension arrangements or their payroll processes. An employer and employees’ pension contributions are set out in the rules of the pension scheme and both they and the contribution requirements continue to apply. If the scheme rules allow it, employees may choose to reduce their contribution level, or they can opt out or cease active membership of the scheme at any time. However, employers must neither encourage nor induce employees to do so.

Paying more than the statutory minimum

Where employers pay more than the statutory minimum auto-enrolment contribution of three per cent, for example if the contribution rate is higher than that, they should continue to make the full contributions due under the scheme even though the excess will not be recoverable under the CJRS.

Reducing the contribution to the statutory minimum

In a Defined Contribution Scheme (DBS) the employer may be able to decrease its contributions to the statutory minimum. However, they cannot legally reduce their contributions below the statutory minimum.

Employers should exercise caution before decreasing their contribution to the statutory minimum, and the advice recommends they consider the following factors:

  • whether changes would have to be made to the employment contracts of staff members
  • whether they need to discuss any proposed changes with recognised trade unions or staff representative forums
  • whether the scheme rules allow a reduction
  • who has the power under the rules to make changes if it is a trust-based scheme
  • whether the rules regarding consultation apply (see below).

Employer consultation requirements

Employers with at least 50 employees with a defined contribution pension scheme are legally required to consult with members or their representatives if they are making changes that decrease employer contributions.

Before deciding any decrease to employer contributions, pensions legislation requires employers with 50 or more employees to consult with them over a minimum period of 60 days.

However, the regulator has relaxed the rule on the duty to consult and will not take regulatory action if the employer fails to consult for the full 60 days, provided:

  • the employer has furloughed staff for whom they are claiming under the CJRS;
  • the employer is proposing to reduce the contribution in respect of furloughed staff only;
  • the reduced contribution rate for furloughed staff will only apply during the furlough period; and
  • the employer has written to affected staff and their representatives to describe the intended changes and the effect on the scheme and the staff themselves.


If any of the above criteria have not been met, then the regulator expects employers to comply with the full consultation requirements.

This easing of these restrictions apply until 30 June 2020 and are subject to review as matters progress.

You can read the advice in full here.

Articles shared by Thompsons relating to coronavirus (COVID-19) are correct at the time of publication. You should check the government's guidelines for the latest information and advice at