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A plethora of guidance is being produced to help employers and trustees deal with the issues arising from the spread of COVID-19 and the measures that have been introduced to limit this.

The table below (which we will update as new guidance is issued) provides links to the key pensions-related COVID-19 guidance issued to date by the Pensions Regulator, the PPF, HMRC and other bodies and links to our associated blogs and briefings.

Regulatory

 

        
Guidance Date of publication Published by Overview HSF briefing
Pension scheme reports and financial statements, and related matters in the context of the COVID-19 pandemic May 2020 Institute of Chartered Accountants of Scotland (ICAS), Institute of Chartered Accountants in England and Wales (ICAEW) and Pensions Research Accountants Group (PRAG)

 
  • Guidance to be considered alongside existing accounting standards and guidance.
  • Key issues include:
    • impact of COVID-19 on the control environment of pension schemes
    • responsibilities for reporting to TPR
    • trustees' report and chair's statement
    • accounting for scheme investments
    • events after the end of the reporting period
    • audit issues, and
    • the auditor's statement about contributions.
Annual Funding Statement 2020 30 April 2020 TPR
  • Annual Funding Statement considers:
    • the effect of COVID-19 on schemes and sponsors
    • funding positions more generally
    • scheme specific considerations including post valuation experience, bringing forward a valuation date, calculating technical provisions, recovery plans, affordability, shareholder distributions and intra group transfers
    • what is expected of trustees including long term funding targets, covenant assessments, covenant leakage and managing risks; and
    • what trustees can expect of the Regulator.
 Pensions Regulator issues Annual Funding Statement for DB schemes and sponsors amid COVID-19 crisis
Communicating to members during COVID-19 29 April 2020 TPR
  • Additional requirement for trustees to issue a template letter to all members who request a CETV quote from a DB scheme, for the foreseeable future.
  • Guidance for DB and DC transfers, and other steps trustees should take.
  • Guidance for trustees in relation to service disruption, stopping contributions and ceasing membership, pension scams and DC investments and market volatility.
 COVID-19: People: Regulator issues further guidance in response to heightened risks associated with pension transfers and scams
DC pension contributions: COVID-19 technical guidance for large employers 17 April 2020 (last updated on 2 November) TPR On 2 November, the Regulator updated its guidance to highlight that the examples and calculations may not be appropriate for staff being newly furloughed on or after 1 November 2020, due to the extension of the CJRS and the delay of the Job Support Scheme.

On 15 June, the salary sacrifice section was updated to include reference to where the member of staff is working for part of the furlough period (from 1 July 2020).

  • Provides technical guidance around salary sacrifice arrangements and for schemes whose definition of pensionable pay is different from qualifying earnings, in relation to the Coronavirus Job Retention Scheme.
Automatic enrolment and pension contributions: COVID-19 guidance for employers 9 April 2020 (last updated 2 November) TPR The Regulator updated its guidance on 2 November to reflect the extension of the CJRS and the delay of the Job Support Scheme. A new section has been added to highlight the various government support packages available for businesses.

The Regulator has updated its guidance to reflect the changes to the CJRS from 1 July 2020 and on or after 1 August 2020:

  • from 1 July 2020, staff on furlough under the Coronavirus Job Retention Scheme may work part of the time for their employer, and
  • for claims starting on or after 1 August 2020, employers will no longer be able to claim a grant for up to the statutory minimum automatic enrolment (AE) employer contribution.

On 6 May, the guidance was updated to include a new section explaining the issues for employers who have furloughed staff.

First published on 9 April 2020, the guidance

  • Provides information on reclaiming pension contributions under the Coronavirus Job Retention Scheme (CJRS).
  • Confirms how automatic enrolment and re-enrolment operate during furlough and the need to maintain pension contributions.
  • Sets out the terms of an easement for employers that do not consult before reducing pension contributions in connection with the introduction of a furlough scheme.
  • Provides further information on the CJRS and what factors employers should consider if they plan to reduce their contributions to the statutory minimum.
  

COVID-19: People: Job Retention Scheme and Pensions (UK)
COVID-19: an update on reporting duties and enforcement activity 9 April 2020 (last updated 24 September) TPR On 16 September, the Regulator updated its guidance to confirm that, with effect from 1 January 2021, the Regulator is asking pension providers and trustees of DC schemes to revert to reporting payment failures that are 90 days outstanding, rather than 150 days. This will become mandatory from 1 April 2021.

In addition, from 1 October, the Regulator will:

  • revert to reviewing all Chair's statements submitted on or after that date, and
  • resume enforcing the requirement for schemes to submit audited accounts and investment statement reviews.

On 16 June, the Regulator updated the guidance to clarify which easements will continue to apply until 30 September 2020 and which reporting requirements will resume as normal from 1 July 2020:

  • Reporting requirements including suspended deficit repair contributions, late valuations and recovery plans not agreed, delays in CETV transfer quotations and payments, failure to prepare audited accounts and master trusts will resume as normal from 1 July 2020.
  • Regarding late payment reporting, providers will continue to have 150 days to report late payments of contributions (other than deficit repair contributions).
  • The Regulator will not be reviewing any chair’s statements (including in relation to master trusts) until after 30 September 2020.
  • The Regulator has said it will take a “pragmatic approach” to late preparation of audited accounts and will accept delays up until 30 September.
  • The Regulator does not anticipate taking regulatory action so long as a review of a statement of investment principles (or statement in relation to any default arrangement) is not delayed beyond 30 September 2020.

The initial guidance:

  • Sets out how the Regulator will respond to breaches of administrative and governance requirements by schemes at this time.
  • Provides a non-exhaustive list of specific areas that are not covered by the two guiding principles, and outlines the Regulator’s approach in respect of these.
 Regulator updates Covid-19 guidance on reporting and enforcement activity

COVID-19: Pressure points: Pensions Regulator outlines approach to enforcement and reporting (UK)
Scheme administration: COVID-19 guidance for trustees and public service 2 April 2020 (last updated 16 June) TPR  

  • Trustees should work with their scheme's administrator to help deliver core functions which may include agreeing changes in operating procedures, holding higher than normal amounts in bank accounts and reducing the burden on administrators by limited any non-critical demands and queries.
  • Trustees of public service schemes should also work with their administrators to deliver critical processes, including paying members' benefits, retirement processing, bereavement services and any processes needed to ensure benefits are accurate.
  • Suggests administrators seek to maintain services for those who are not online and potentially vulnerable, through the safe and secure processing of post, and providing a telephone service for critical queries.
COVID-19 guidance for administrators 30 March 2020 PASA
  • The guidance summarises key actions administrators should take to:
    • ensure sufficient funds are available to pay benefits
    • keep accurate records of ongoing work, and
    • maintain evidenced accuracy of benefit calculations.
  • Includes lists of basic enables and high level enables for administrators to meet pension scheme priorities.
DC scheme management and investment: COVID-19 guidance for trustees 27 March 2020 (updated 17 April 2020, 13 May, 21 May, 30 June and 11 January 2021) TPR
  • Summarises key actions trustees of DC schemes should take in respect of their investment funds, including:
    • considering how members may react in the current climate and issuing appropriate member communications
    • reviewing and managing risks that may exist within their investment funds
    • reviewing agreed future investment and risk management decisions;
    • reviewing investment governance structures, and
    • assessing recent performance of their scheme's funds.
  • On 13 May the Regulator updated the guidance to include a new section on member transfers, emphasising that DC transfers are 'core financial transactions'.
  • On 21 May, the Regulator updated its guidance to add a new section on when a temporary closure of funds creates a default arrangement.
  • On 30 June, the Regulator updated the section on when a temporary closure of funds creates a default arrangement to include a section on redirecting contributions back into the original fund and when this would create a default arrangement.
  • On 11 January 2021, the Regulator updated its guidance to include a new section on transfer requests where a member's pension savings are held in a gated fund.
 COVID-19 Pressure points: Regulator gives green light for trustees to suspend transfer values and updates guidance on deferring employer pension contributions (UK)
DB scheme funding and investment: COVID-19 guidance for trustees 27 March 2020 (updated on 16 June) TPR On 16 June, the guidance was significantly updated to provide an update of our view of the impact of COVID-19, explain how we will continue to adapt our regulatory approach and to provide guidance for trustees dealing with difficult decisions.

New and updated sections include:

  • the Regulator's monitoring of the current landscape,
  • suspending or reducing contributions,
  • requests to release security,
  • valuations due to be finalised,
  • scheme investments,
  • dealing with difficult decisions, and
  • CJRS

The original guidance:

  • Contains guidance for schemes completing their valuations now.
  • Information on employers’ requests for easements – including requests to suspend or reduce deficit recovery contributions (DRCs), requests to suspend or reduce payments for future service, payments to related entities or shareholders, requests to release security and advice and governance;
  • Guidance on DB investments – trustees should review cash flow requirements, specific risks which exist in their portfolios, any agreed investment and risk management decisions, investment governance structures, and assess recent scheme performance, and
  • Guidance on suspending transfer values – warns about the heightened risk of members being targeted by scammers, and confirms that trustees can decide to suspend CETV quotations and transfer payments from their scheme for up to three months.
 COVID-19 Pressure points: Regulator gives green light for trustees to suspend transfer values and updates guidance on deferring employer pension contributions (UK)
DB scheme funding: COVID-19 guidance for employers 27 March 2020 (updated 16 June) TPR On 16 June, the guidance was updated to make sure the guidance is consistent with updated guidance for trustees.

  • Annual Funding Statement expected after Easter.
  • TPR’s approach will be pragmatic in scenarios where trustees are being asked to agree to a previously unforeseen arrangement (such as DRC reductions or suspensions, or additional debt being secured over employer assets) provided:
    • it can be justified
    • a plan is made for deferred scheme payments to be caught up
    • a plan is agreed for mitigating any detriment caused to the scheme, and
    • the scheme is being treated fairly compared with other stakeholders.
 COVID-19 Pressure points: Regulator gives green light for trustees to suspend transfer values and updates guidance on deferring employer pension contributions (UK)
Coronavirus (COVID-19) update 20 March 2020 The Pensions Ombudsman
  • In this statement the Ombudsman confirms that:
    • it is only focusing on existing enquiries and complaints for the time being
    • any post or emails received by the Ombudsman will not be dealt with and correspondence will need to be re-submitted (by post or email) once the Ombudsman is in a position to restore full service; and
    • the Ombudsman’s staff will continue to work from home on existing cases, so complaints or enquiries that have already been submitted to the Ombudsman will be progressed as normal.
Guidance for DB scheme trustees whose sponsoring employers are in corporate distress

Now links to (DB scheme funding and investment: COVID-19 guidance for trustees)

 20 March 2020 TPR
  • Sets out questions related to COVID-19 for trustees to ask their scheme’s sponsoring employer.
  • Provides guidance on considering employer requests to defer DRC payments.
 COVID-19 Pressure points: Pensions Regulator and PPF issue guidance for trustees of DB schemes with distressed sponsors (UK)
COVID-19: an update for trustees, employers and administrators

Now links to (DB scheme funding and investment: COVID-19 guidance for trustees)

 20 March 2020 TPR
  • Summarises TPR’s expectations of trustees.
  • How to help protect members from scams.
  • Links to PASA guidance for administrators;
  • Links to TPR's automatic enrolment guidance for employers, and
  • Confirms that the DB funding code consultation closing date has been postponed until 2 September 2020.
 COVID-19 Pressure points: Pensions Regulator and PPF issue guidance for trustees of DB schemes with distressed sponsors (UK)
How trustees can prepare for the unexpected 17 March 2020 PPF
  • This statement reminds trustees of the need to ensure that they are prepared and have suitable contingency plans in place should their scheme’s sponsor become insolvent.
  • Directs trustees to its guidance on ‘Contingency planning for employer insolvency’, which highlights the need for trustees to plan ahead to ensure as smooth a transition as possible for scheme members should the scheme need to enter the PPF.
 COVID-19 Pressure points: Pensions Regulator and PPF issue guidance for trustees of DB schemes with distressed sponsors (UK)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coronavirus Job Retention Scheme
        
Guidance Date of publication Published by Overview HSF briefing
Chancellor extends furlough and loan schemes 17 December 2020 The Treasury Rishi Sunak has announced that the Coronavirus Job Retention Scheme (CJRS) or ‘furlough’ scheme, will be extended until the end of April 2021, for all parts of the UK.

Originally the Chancellor had said he would review the employer contribution element of the CJRS in January “to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions”. However, he decided to bring this review forward in recognition of the fact that “business owners need additional certainty as we head into the New Year”.

 Covid-19 (UK): Chancellor extends Coronavirus Job Retention Scheme again until April 2021
Furlough Scheme Extended and Further Economic Support announced

Calculate how much you can claim using the Coronavirus Job Retention Scheme, Steps to take before calculating your claim using the Coronavirus Job Retention Scheme, and an example of calculating a claim for a flexibly furloughed employee

 31 October 2020

12 June 2020

 HMRC The Prime Minister’s announcement on 31 October 2020, of a planned new national lockdown from Thursday 5 November to Wednesday 2 December (subject to parliamentary approval), was accompanied by a decision to extend the Coronavirus Job Retention Scheme (CJRS) until at least 2 December, and a consequent delay to the start of the less generous Job Support Schemes originally scheduled to apply from 1 November, until the CJRS ends. The legal framework and guidance have yet to be put in place.

From 1 July 2020, furloughed employees can return to work on a part-time basis. Other changes are also being made to the Coronavirus Job Retention Scheme (CJRS) from this date, including to the way in which claims will need to be submitted. In addition, from 1 August, employers will be required to cover the full cost of employer pension contributions (and employer NICs) even for periods when a furloughed employee is not working. These changes are summarised in our recent blog on the changes to the CJRS that were announced on 29 May 2020.

The legal framework for the revised scheme will require a further Treasury Direction as the current one only applies until 30 June, no date for publication of a revised Direction has been given.

The introduction of partial furlough (from 1 July) and the requirement for an employer to cover the full cost of employer pension contributions (from 1 August), will introduce new complexities into the calculation of employer and employee pension contributions and into the amount that employers can claim under the CJRS (for July). In particular:

  • where a furloughed employee returns to work part-time on or after 1 July,
  • from 1 August, when the amount of support provided under the CJRS will be tapered and employers will be required to cover the full cost of employer pension contributions (and employer NICs) even for hours not worked from 1 August onwards, and
  • complexities where an employee pays their pension contributions via a salary sacrifice arrangement, as an employer may be required to cover the cost of some or all of the employee’s pension contributions.

The Steps to take before calculating your claim guidance confirms that, from 1 July, claims can only cover days within one calendar month, but this does not prevent the furlough itself from overlapping months – there is no need for an employee’s furlough to be ended and restarted with each month-end. For some employers, claim periods may well differ from pay periods. This will introduce extra complexity.

 Covid-19 (UK): Government extends Coronavirus Job Retention Scheme but employers must cover pension contributions

Further guidance on partial furlough published (UK)

Pension contributions and partial furlough (UK)
Chancellor confirms furlough next steps 29 May 2020 The Treasury The Chancellor announced that:

  • The latest an employee can be placed on furlough for the first time is 10 June 2020.
  • Partial furlough will be possible from 1 July 2020. Employers will be able to claim in respect of previously furloughed employees either for full furlough, or for partial furlough where employees work part of their normal hours. The employer must pay wages and employer NICs and pension contributions for the hours worked, and can make claims under the CJRS in respect of the normal hours not being worked.
  • The CJRS grant will continue to cover 80% of wages for unworked hours (subject to the monthly cap of £2,500 or, for partial furlough, a proportionate cap reflecting the hours not worked), plus associated employer NICs and pension contributions.
  • For August, employers must pay the employer NICs and pension contributions for the hours not worked; the CJRS grant will continue to cover 80% of wages subject to the cap.
  • For September, employers must contribute 10% of the capped wages (plus employer NICs and pension contributions) with the government paying 70% of capped wages for the hours the employee does not work (so the employee continues to receive 80% wages subject to the cap).
  • For October, the employer contribution increases to 20% (plus employer NICs and pension contributions) and the government contribution reduces to 60% of capped wages.
  • The CJRS will close on 31 October 2020.
 People: Chancellor confirms changes to Coronavirus Job Retention Scheme (UK)
Chancellor extends furlough scheme until October 12 May 2020 The Treasury The Chancellor announced in Parliament that:

  • the Coronavirus Job Retention Scheme will remain in place and be available to all sectors through to the end of October
  • the scheme will continue without change until the end of July
  • from August there will be greater flexibility
  • in particular, employers currently using the scheme will be able to bring furloughed employees back part-time and employers will also be asked to ‘start sharing the cost’ of the scheme, and
  • the support provided by the scheme will continue at the same level (i.e. 80% of a furloughed employees’ wages (subject to the £2,500 per month cap) plus associated NICs and auto-enrolment minimum employer pension contributions).
 Chancellor extends Coronavirus Job Retention Scheme until end of October
Claim for your employees' wages through the Coronavirus Job Retention Scheme First published 26 March 2020 (last updated 12 June 2020) HMRC On 12 June, this page was updated to include details on how the scheme will change from 1 July 2020 (see above).

On 29 May, the Chancellor announced how the Coronavirus Job Retention Scheme would be changing over the next few months (see above).

Updated guidance relating to pensions of 9 April:

  • Clarification that scheme grants in respect of employer pension contributions in scope must be paid into a pension scheme for the relevant employee as an employer contribution.
  • While on furlough, the employee’s wage will be subject to usual income tax and other deductions.  However, the updated guidance clarifies that the capped 80% furlough pay must be paid to the employee without deduction for administrative charges, fees or other costs in connection with the employment.
  • Clarification that where there is a salary sacrifice scheme, the grant (which will be based on the post-sacrifice salary) must be paid to the employee in money and cannot be used to pay for the provision of any benefits provided through salary sacrifice schemes (including pension contributions).  An employer would therefore need to continue to provide these benefits (including the increased pension contribution due to salary-sacrifice) at its own expense unless other arrangements are agreed as part of the furlough agreement.  The guidance already noted that salary sacrifice arrangements can be changed in recognition of COVID-19 being a ‘life event’.

Updated guidance relating to pensions of 15 April:

  • Claims under the scheme will now be possible in respect of employees who were employed and on the employer’s payroll on or before 19 March 2020 (just before details of the scheme were announced), rather than 28 February.  The guidance now clarifies that being on payroll for these purposes means that an RTI submission notifying payment in respect of the employee to HMRC must have been made on or before 19 March 2020.
 COVID-19: People: Job Retention Scheme and Pensions (UK)

COVID-19: People: Job Retention Scheme (UK)

To keep up to date with all the updates made to HMRC's guidance, check out our Employment blog.
Treasury Direction made under Sections 71 and 76 of the Coronavirus Act 2020 15 April 2020 (last updated 13 November) The Treasury On 13 November 2020, the Coronavirus Act 2020 Functions of Her Majesty's Revenue and Customs (Coronavirus Job Retention Scheme) Direction was published (dated 12 November 2020). This is the fifth Treasury direction. It extends the CJRS until 31 March 2021 but only covers the period 1 November 2020 to 31 January 2021. A further Treasury direction will be made covering the CJRS in February and March 2021. The previous Treasury directions continue to have effect but are modified by the fifth Treasury direction.

  • The Chancellor has made a Treasury Direction under Sections 71 and 76 of the Coronavirus Act 2020.
  • It sets out that HMRC are responsible for the payment and management of amounts to be paid under the Coronavirus Job Retention Scheme, as set out in the Schedule to the Direction.

Changes relating to pensions of 22 May include:

  • Clarification that a director will not be treated as doing work (and therefore outside the CJRS) where they are carrying out of duties as a trustee or manager of an occupational pension scheme (save where the employer’s business is the provision of occupational pension scheme independent trustee services).

Follow the latest news on the impact of COVID-19 on UK pension schemes and sponsors on our UK pensions blog. For updates on the wider impact check out HSF’s COVID-19 hub.

 

 

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Alison Brown

Executive Partner, EMEA, UK and US, London

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Samantha Brown

Managing Partner of EPI (West), London

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Rachel Pinto

Partner, London

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COVID-19 Defined benefit Defined contribution Funding Governance Investment Regulatory

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Alison Brown

Executive Partner, EMEA, UK and US, London

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Samantha Brown

Managing Partner of EPI (West), London

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Rachel Pinto

Partner, London

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Disclaimer

The articles published on this website, current at the dates of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.

Alison Brown Samantha Brown Rachel Pinto