Can employers reduce their pension contributions?
- Yes, if contributions to a defined contribution (“DC”) scheme exceed statutory minimum for auto-enrolment purposes, it may be possible to reduce employer contributions to the statutory minimum, but not further.
- However, the processes required for reduction of DC employer contributions will necessitate obtaining legal advice:
- Reducing employer contributions may require changes to the employment contracts of affected staff (as does the furlough process).
- Reducing employer contributions may also require negotiation with trade unions or other staff representative forums.
- Where group personal pensions are used, the contractual format may not permit changes of employer contributions, and hence it may also be necessary to enter into a new contractual arrangement. Choosing a new group personal pension plan is a not insignificant task in itself.
- Employers with at least 50 employees are required to conduct a 60-day consultation process with affected employees if they propose to reduce employer contributions (but please see below).
- Finally, it may require a change to the scheme rules and engagement with the scheme trustees if the scheme is operated under trust.
- For DB schemes, specific considerations apply (see the last section, below).
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From our perspective, we would ask managers to be mindful that stress and anxiety is likely to feature in how an individual reacts to questions about the level of risk to their health and the impact on their duties. The conversations with some staff may not be easy to have and may be met with challenge.
For those staff who’s stress and anxiety is such that it would qualify as a disability, reasonable adjustments will need to be considered to the processes that you are applying.
An additional point to consider – it might be worth writing to all staff, asking them to come forward if they have any health conditions that they think you ought to be aware of, assuring them that such information is being given in the strictest confidence. You want to make sure that you are taking the appropriate measures to ensure their health and safety.
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- How are banks making their assessments of whether a business can afford a CBILS loan when for many they cannot accurately forecast their revenues for at least the next three months?
- What are the red flags that banks are looking for when assessing whether or not to grant a request for a CBILS loan?
- What cost mitigation measures should a business have already implemented prior to applying for a CBILS loan?
- What level of information should a business provide to support a CBILS application?
- What common mistakes are businesses making when applying for funding?
- What general tips do you have for businesses seeking CBILS funding?
Click read more to view the video.
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