How does COVID-19 affect employee pensions?
The current climate is throwing up questions for payroll and HR staff everywhere. Can employees temporarily forfeit their pension contribution? Do employers need to contribute to pensions? Don’t stress, because we’re here to help you get to grips with The Pensions Regulators’ advice.
The Pensions Regulator recognises that ‘these are unprecedented, challenging and uncertain times for trustees, employers, administrators and, crucially, savers.” They are closely monitoring the COVID-19 situation, and working collaboratively with government, regulators and other bodies to assess the most immediate risks to pension schemes.
Trustees of both defined benefit (DB) and defined contribution (DC) schemes, employers and administrators should focus their activities on the key risks to pension savers:
• Benefits need to be paid (DB only)
• The risk of scams needs to be minimised
• Employers need to continue contributing
• Savers need support to make good decisions in these challenging circumstances
• Some administrative breaches of the law may occur, and The Pensions Regulator will maintain a proportionate and fair approach to any action we may take
Pension advice for employers
The Pensions Regulator aims to help get employers back on track and supports both employers and savers. They are taking a balanced and risk-based approach towards enforcement decisions, taking into consideration the challenging circumstances.
If you have concerns about not being able to pay your employees’ pensions, then please get in touch with The Pensions Regulator as soon as you can. They have emphasised that they are much more likely to be able to support to you if you’re upfront about your circumstances from the get-go.
Protecting your employees from scams
Unfortunately, the current situation around market uncertainty means many people are being scammed into taking their money out of their pension pots. It’s important to make your employees aware that these scams are taking place and inform them of the risk that they could be targeted by scammers posing as reputable organisations.
If an employee asks about transferring their pension, urge them to exercise extreme caution and visit ScamSmart which has specific guidance relating to COVID-19. You could also point them to the Money and Pensions Service which is particularly useful for people who are approaching retirement and whose pension might have been affected by the current economic conditions.