The next phase of changes to the CJRS announced by the Government back in May 2020 takes effect from this month.

What are the changes, and how do they impact on pension contributions?

Regular readers please note: this is a reminder of the changes.
We’ve covered the full details in previous briefing notes that can be found in our
Coronavirus Resource Centre.

Since the introduction of the Coronavirus Job Retention Scheme (CJRS) in March 2020, the Government has fully funded furlough pay through CJRS grants of up to 80% of wages subject to a cap of £2,500 a month. From 1 September the Government is reducing their funding and employers will be required to pay at least 10%.

In May 2020, the government announced key changes to the CJRS which would be phased in from July until the scheme is scheduled to end on 31st October 2020:

July - Part-time return to work

From 1 July, flexible furloughing was introduced, enabling furloughed employees to return to work on a part-time basis. Employers need to pay the wages, employer national insurance contributions and pension contributions in respect of the hours worked, and are able to continue to claim the CJRS grant for the hours not worked. The minimum period for a claim is one week instead of the previous current three week minimum. More detail can be found in the Government’s CJRS guidance page here.

August – Pension and national insurance contributions

Furlough pay capped at 80% of wages (up to £2,500) is scheduled to continue through to 31st October 2020. However, from 1 August full responsibility for paying employer national insurance contributions and employer pension contributions returned to employers.

September – Furlough pay cost sharing

For September’s earnings, in addition to the pension and national insurance contribution changes in August, the Government requires employers to pay 10% of furlough pay, with the remaining 70% met by the Government. This amounts to £312.50 a month for an employee entitled to the maximum capped furlough pay of £2,500 a month:

Employer

10%

Up to £312.50 pm

Government (CJRS grant)

70%

Up to £2,187.50 pm

Total

80%

Up to £2,500.00 pm

October – Furlough pay cost sharing

The final phase covering October’s earnings requires employers to pay 20% of furlough pay amounting to £625.00 a month for an employee capped at £2,500 a month:

Employer

20%

Up to £625.00 pm

Government (CJRS grant)

60%

Up to £1875.00 pm

Total

80%

Up to £2,500.00 pm

Reminder of record-keeping requirements

Alongside the update to the furlough scheme, HM Revenue and Customs (HMRC) also confirmed that employers must keep a written record of the agreed flexible furlough working arrangements for at least five years. In addition, records of all claims and calculations must be kept for at least six years and should include amounts claimed and the claim periods for each employee, calculations used for the claims and the usual and actual hours worked by flexibly furloughed employees.

This note is based on Punter Southall Aspire's understanding of guidance provided by:

If you would like any assistance with your furlough arrangement please contact us.

 

 

Concerned about errors that may have arisen as you went through the furlough process?

Watch our webinar on Thursday 10 September with Freeths LLP to find out what the issues are and how to remedy them:

Sign up here

 

 

Posted by Steve Butler

Topics: Automatic Enrolment, Pensions

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