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Workplace Pensions: Coronavirus

Question for Department for Work and Pensions

UIN 51611, tabled on 1 June 2020

To ask the Secretary of State for Work and Pensions, what estimate she has made of the number of people that (a) opted-out and (b) ceased active membership of auto-enrolment pension schemes since the start of the covid-19 outbreak.

Answered on

9 June 2020

Key to supporting both businesses and pension savers is the Coronavirus Job Retention Scheme (CJRS) which offers an unprecedented package of support for businesses. Under the CJRS grants have been available to employers to support business by covering up to 80 percent of a furloughed worker’s regular salary, capped at £2,500 per month. Additionally, the grants also cover statutory minimum employer pension contributions into registered pension schemes on behalf of furloughed employees.

On 29th May the Chancellor announced how changes to the CJRS will be phased in prior to closure of the scheme at the end of October. The changes provide flexibility from July when furloughed workers will be able to return to work part-time. From August employers will be asked to pay employer NICs and pensions contributions for their workers.

Helping people save for their futures remains a key priority for Government, and employers are still required to comply with obligations under automatic enrolment to enrol employees into workplace pensions and then make contributions. We have asked employers to share the costs of paying the wages of furloughed workers and starting with the costs of employer national insurance and pension contributions is a simple and fair way to do that.

By easing the burden of workplace pensions for employers, we are helping them better manage costs during the crisis whilst supporting long-term saving for the future.

The Department does not yet have suitable data to make an assessment of the number of employees who have reduced their contributions, or have stopped saving, since the start of the Covid-19 outbreak.

The last assessment by the Department of opt-out and cessation was published in our 2019 Automatic Enrolment Evaluation Report, when we estimated that 0.76 per cent of savers in the first quarter of the 2019/20 financial year made an active decision to stop saving.

The Department continues to monitor Automatic Enrolment using a range of sources such as the annual Workplace Pension Participation Statistics, which will next be published on 18th June covering workplace pension participation and contributions up to April 2019.