Govt’s Job Support Scheme will not cover pension contributions

The new Job Support Scheme, announced by Chancellor, Rishi Sunak, yesterday (24 September), will not cover pension contributions, the government has confirmed.

Pension contributions will remain the responsibility of the employer and will not be supported by the government’s scheme.

The Job Support Scheme is designed to support workers and employers following the closure of the Coronavirus Job Retention Scheme, which covered furloughed worker’s minimum pension contributions on the proportion of wages covered by the government.

Under the new scheme, employees must work at least a third of their hours, with employers covering the hours worked, then the government and the employer paying a third of wages each for the hours they do not work.

This would result in employee’s working a third of their hours receiving 77 per cent of their pay, with the government grant capped at £697.92 per month.

Employers would be responsible for 55 per cent of their wages, while the government would be responsible for 22 per cent.

The scheme will run for six months from November, with small- and medium-sized businesses eligible, as well as large businesses whose turnover has fallen during the pandemic.

National Insurance (NI) contributions will also not be covered under the scheme and remain payable by the employer.

Fieldfisher pensions lawyer, Jeremy Harris, explained: “The employer will be liable in the usual way to pay its pension contributions under the auto-enrolment legislation on that normal contracted wage, as well as paying the employer's NI contributions on it.

“The employer will be liable in the usual way to deduct the employee's pension contributions under the auto-enrolment legislation from that normal contracted wage, as well as the income tax and NI contributions to which the employee is liable.

"The employer will be liable to pay its pension contributions under the auto-enrolment legislation on the two-thirds of usual wage paid by the employer under the Job Support Scheme for the time not worked by employees, as well as paying the employer's NI contributions on that two-thirds.

“The employer will be liable to deduct the employee's pension contributions under the auto-enrolment legislation from that two-thirds usual wage, as well as the income tax and NI contributions to which the employee is liable.”

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