Employer contributions

We recognise that the ongoing Coronavirus outbreak may be placing considerable strain on you and your clients. As part of our support for you, we’ve provided a summary of the Government’s Coronavirus Job Retention Scheme (CJRS) and its effects on employer pension contributions.

The CJRS was set up in March 2020 by the Government in response to the COVID-19 virus. The scheme has been amended and extended several times since then. As announced in the Budget on 3rd March 2021, it's now running until 30th Septebmer 2021.



The key elements are as follows, but for further information, including how to access the scheme, visit this link.

The CJRS is available to UK employers with a PAYE scheme. It provides financial support towards continuing to pay part of employees’ salaries for those who would otherwise have been laid off during this crisis. It originally applied to fully furloughed workers who were asked to stop working altogether, but who were kept on the payroll. Flexible furlough allowing for part-time working was introduced from 1st July 2020, with pro-rated CJRS financial support for hours not worked.

  • 1st March to 31st July 2020

    Up to 31st July 2020, the CJRS financial support covered up to 80% of salary capped at £2,500. It also covered the employer’s National Insurance (NI) contributions and the minimum employer pension contribution of 3% of qualifying earnings required under automatic enrolment.
    Flexible furlough was introduced from 1st July 2020. Up to 31st October 2020, this was only available for previously furloughed workers who were returning to work on a part-time basis.

  • 1st to 31st August 2020

    For fully furloughed workers, the scheme covered up to 80% of salary capped at £2,500 – there was no longer any financial support for employer NI or pension contributions. Flexible furlough was available.

  • 1st to 30th September 2020

    For fully furloughed workers, the scheme covered up to 70% of salary capped at £2,187.50, with employers required to pay at least 80% of salary. Flexible furlough was available.

  • 1st to 31st October 2020

    For fully furloughed workers, the scheme covered up to 60% of salary capped at £1,875, with employers required to pay at least 80% of salary. Flexible furlough was available. The CJRS was originally intended to end on 31st October 2020, but was extended.

  • 1st November 2020 to 30th June 2021

    From 1st November 2020, CJRS financial support returned to the August 2020 basis – covering up to 80% of salary capped at £2,500 for fully furloughed workers. It also became possible to move workers straight onto flexible furlough, with part-time working and pro-rated CJRS support for hours not worked. Following the Budget announcement on 3rd March 2021, these provisions apply until 30th June 2021.

  • 1st to 31st July 2021

    For fully furloughed workers, the scheme covers up to 70% of salary capped at £2,187.50, with employers required to pay at least 80% of salary. Flexible furlough is available.

  • 1st August to 30th September 2021

    For fully furloughed workers, the scheme covers up to 60% of salary capped at £1,875, with employers required to pay at least 80% of salary. Flexible furlough is available. The CJRS will now end on 30th September 2021.



  • The CJRS applies where a business has fully or flexibly furloughed workers as explained above. The scheme now provides financial support for furloughed workers’ salaries only – it ceased to provide any contribution towards the cost of employer pension and NI contributions after 31st July 2020.
  • For furloughed workers, we expect that contributions to automatic enrolment and other qualifying schemes should be maintained at the normal percentage, but based on the furloughed employee’s reduced pensionable earnings. If employers wish to reduce contributions to the statutory minimums, they should consider The Pension Regulator’s (TPR’s) guidance.
  • Where a business has made other arrangements with employees such as reducing pay (for example to 50% of normal salary), we would expect pension contributions to continue and be based on the reduced salary applying to each pay reference period.
  • Where a business is carrying on its operations as normal, we would not expect any changes in relation to pension contributions.
  • Where an employer falls into arrears, the current rules require missed contributions to be made up at a future date. Normally a recovery plan would be agreed with TPR at the earliest point. We expect that in the current circumstances the matter of arrears will be addressed with TPR at a later date.
  • Where a business has ceased trading, no further contributions will be payable. However, if the scheme was in arrears prior to this there may be a claim on the assets of the business in respect of missed contributions, as is normally the case.

Frequently asked questions

What is the process for the reporting of late payments?

The Pensions Regulator (TPR) adopts a risk-based approach to contribution monitoring, so resource is focused on sectors or employers which it deems to represent the greatest level of risk to pension provision. The economic backdrop has changed significantly as a result of the global COVID-19 pandemic and we have seen TPR adapting its approach to reflect these conditions.

Scottish Widows, as a pension administrator, has a duty to inform TPR when pension contributions have been in arrears for 90 days. After the outset of the pandemic, TPR temporarily relaxed that obligation, so that Scottish Widows was only required to notify TPR of arrears after a period of 150 days. However, normal reporting requirements resumed from 1st January 2021.

If you have any concerns relating to your clients’ firms’ ability to maintain pension contributions, you should contact TPR.

What should I do as TPR has confirmed that employers must continue to make pension contributions?

Any employer who has concerns about their ability to make payments should contact TPR to discuss their situation and agree a way forward. If your client’s scheme is with Scottish Widows, they should also notify us of their discussion with TPR.

What amount should the employer contribution be based on?

Whatever pensionable pay the employee has in the pay period.

What happens if employees are off sick?

Automatic enrolment legislation requires Statutory Sick Pay (SSP) to be treated as part of qualifying earnings, or as part of basic pay under set 1, 2 or 3 certification. These rules apply to both automatic enrolment schemes and qualifying schemes using contractual enrolment. Employers will need to continue deducting contributions from the members’ salaries.

To help in the current situation, the Government has amended the rules for SSP linked to COVID-19.

If an employee decides to stop making contributions given the reduction in wage, should the employer still pay in?

For contract-based schemes, unless a contractual obligation exists within the employee’s contract of employment, the employer is not obliged to pay if the employee ceases payments, but can choose to maintain their payments.

For trust-based schemes, the scheme rules should be checked to see whether the employer payments can also stop, but again the employer can choose to maintain their payments.

Where an employer is in receipt of a Government allowance for furloughed workers, the amount will be based on the employee’s salary. Up to 31st July 2020, this amount was then grossed up to compensate for any employer NI contributions actually incurred and the minimum 3% employer pension contribution based on qualifying earnings. If claimed, the 3% employer contribution had to be paid into the pension scheme, irrespective of what the employee chose to do.

Should the employer automatically reduce the contributions made given the new salary or offer employees the ability to take a ‘payment holiday’?

All payments made should continue to be determined by the pensionable pay in the respective pay period. If the pensionable pay reduces then we would expect the pension payment to reduce accordingly.

There is no provision within automatic enrolment legislation which allows employers to offer employees a contribution holiday. To do so would be breaking the law.

TPR confirms in its guidance to employers that this rule remains in force. If employers need to discuss specific challenges which they or their workforce are facing in relation to the maintenance of contributions, the employer will need to take the matter up with TPR.

If the employer operates a salary sacrifice scheme, do they need to maintain the payments (as they would if the employee was on parental leave for example)?

Salary sacrifice payments made by the employer are a non-cash benefit under a contractual agreement with the employee and are not the employee’s pay.

Employers will need to check the wording of the agreement to see what ability they have to amend/stop the salary sacrifice. It might be that the current salary sacrifice agreement is limited to a 12 month period and they could amend it at the end of that period.

TPR’s comprehensive guidance on furlough, pension contributions and salary sacrifice.

What should employers do with their pensions if having to make employees redundant?

This would be treated in line with any redundancy event.