How will the new Job Support Scheme affect workplace pensions?

The new Job Support Scheme (JSS) will replace the existing Job Retention scheme.

Furlough scheme extended

The new JSS was supposed to start on the 1st of November. However, the Government announced an extension of the existing Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough Scheme – until December.

Employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500. Under the extended scheme, the cost for employers of retaining workers will be reduced compared to the current scheme.

What is the Job Support Scheme?

The Job Support Scheme aims to protect ‘viable jobs’ in businesses facing lower demand due to COVID-19.

The JSS is open to all employers whose turnover is impacted by COVID-19, even those who didn’t participate in the Job Retention Scheme (JRS). Any worker who is on payroll on or before the 23rd of September can be put on the scheme.

How does the JSS work?

  • Employees must work at least 20% of their “usual” hours
  • The employer must pay the hours worked as usual, plus 5% for hours not worked. There is a cap of £125 a month
  • The Government will contribute up to a further 61.67% of wages for the hours not worked, up to a maximum of £1,541.75 per month

Therefore, employees will earn at least 73% of their normal wages, where their usual wages do not exceed £3,125 per month.

JSS for Closed Businesses

The expanded Job Support Scheme applies to employers that legally require to close their premises under local or national restrictions.

In this case, the Government will pay 66% of the employee’s wages, capped at £2,100 per month.

What about pension contributions?

Both employers and employees need to continue to pay national insurance and minimum pension contributions. The Government contribution will not cover employer NI or pension contributions and employers will remain liable for these.

Pension contributions are calculated as a percentage of the worker’s pay. Therefore, they may be lower during the period when your staff’s hours and earnings are reduced.

Employer workplace pension contributions still need to meet a minimum of 3% of the worker’s qualifying earnings. See more details here.

Workplace pension admin is complex

Make sure you are compliant with the Auto-Enrolment regulation during these complicated times. Husky’s cloud-based workplace pension platform eliminates the complexity, time, risk and cost associated with managing workplace pensions.

Contact us on 0800 044 8114 or email support@huskyfinance.com to learn about how we can support you.

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