Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Employment UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (April 9, 2020, 1:53 PM BST) -- Companies must continue to make minimum contributions to employees' pension pots as normal despite cash flow stresses from the coronavirus crisis, the U.K.'s pensions watchdog said Thursday.
The Pensions Regulator said businesses were also still bound by responsibilities to automatically re-enroll existing employees to workplace pension plans but could apply for a three-month postponement for enrolling new staff.
The statement came as part of an update to guidance for businesses affected by coronavirus-related disruption. Last week, the regulator said it would not take enforcement action against companies that miss deficit contributions, prompting several companies to temporarily suspend payments.
"These are unprecedented times and we are acutely aware of the pressure employers are now under. While employers continue to have responsibilities, we are weaving in as much flexibility as possible to help employers and protect savers," said Joe Turner, the TPR's head of automatic enrollment.
"We are continually reviewing and updating our guidance to respond to the challenges as they unfold," Turner added. "Further guidance will be published shortly outlining in more detail what employers can expect from us in the weeks and months ahead."
Under U.K. pension rules, the minimum contribution to workplace plans is 8% of earnings, with employees paying in 5% and their employers contributing at least 3%.
The TPR said the government would pay those contributions if companies had furloughed their staff, with 80% of employee salaries paid by the U.K.'s coronavirus job retention scheme.
If employers are paying more than 3% minimum contributions the excess will however not be paid by the government, and will have to be borne by companies instead, the regulator said.
The advice follows the regulator's note last week that it would not take action against companies that fail to make payments toward closing pensions deficits, which have grown £120 billion ($146 billion) since the start of the year.
On Monday, a spokesman for troubled retailer Debenhams confirmed to Law360 it had suspended its deficit contributions.
"Debenhams is not 'dumping' its pension liabilities," he said. "Discussions with the trustees and the [Pension Protection Fund] are continuing for a temporary suspension in contribution payments, given The Pensions Regulator's recent announcement that companies could access a three-month pension contribution holiday over the COVID-19 disruption period."
--Editing by Rebecca Flanagan.
For a reprint of this article, please contact reprints@law360.com.
