Furloughed employees to continue benefiting from employer pension contributions

Furloughed employees during the coronavirus will continue to benefit from employer pension contributions of up to £75 a month.

The DWP has confirmed that automatic-enrolment will not be suspended during the coronavirus crisis.

“If an employer is claiming for assistance from the government to cover wages under the Coronavirus Job Retention Scheme, then they can claim 80% of a furloughed employees’ usual monthly salary up to a cap on the claim of £2,500 per month,” Aegon pensions director Steven Cameron said.

“On top of this, they can also claim the associated employer’s National Insurance contributions and 3% of qualifying earnings for minimum auto-enrolment employer pension contributions. This means furloughed employees will continue to benefit from employer contributions of up to £75 a month.

“The DWP has also confirmed they anticipate that employees will continue to make pension contributions from their salary (whether they are working normally or on furlough) to help them save for retirement. They do acknowledge that employees have an option to choose to stop paying although this is likely to result in the cessation of employer contributions too.”

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