5 October 20202 minute read

Winter Economy Plan - Pensions

The Chancellor has introduced his Winter Economy Plan, including the Job Support Scheme (JSS), which aims to fulfil a similar role to the Coronavirus Job Retention Scheme (CJRS). In relation to pensions, key features are:

  • Employees must have been on payroll on or before 23 September 2020, and must work at least 33% of their usual hours whilst the JSS applies.
  • For every hour not worked, each of the government and the employer will pay a third of the employee’s usual hourly wage. This means the employees will earn a minimum of 77% of their usual wages (where the government contribution is not capped).
  • Large businesses will have to meet a financial assessment test, limiting the availability of the scheme.
  • Pensions contributions and National Insurance contributions are NOT covered by the scheme, although these contributions will remain payable by the employer.
  • It is currently unclear whether the employer will be expected to pay NICs and pensions contributions in respect of the salary they will pay for hours not worked.
  • Like the CJRS, changes to employees’ working arrangements must be notified in writing and agreed by staff, and changes to the employment contract must be by agreement. Similar to the CJRS, this may pose particular issues in relation to salary sacrifice arrangements.
  • The JSS will run for 6 months from 1 November 2020.
  • Further guidance will be published shortly, and will hopefully include more details about how pensions contributions are to be calculated, and further example calculations.