The Pensions Regulator declined to comment on whether discussions were taking place about the possibility of firms taking a pension holiday to help ease financial burdens during the coronavirus pandemic.
However TPR was clear that as matters stand employers are legally required to meet automatic enrolment obligations.
A spokesman for The Pensions Regulator says: “We expect employers to continue to meet their automatic enrolment duties towards their staff. We are closely monitoring the situation in these challenging times and will act in line with government guidelines.”
He points out that the government has published and regularly updates information about support for employers, employees and businesses affected by Covid-19. These can be found here.
However financial advisers and benefit consultants says they have already had queries from businesses asking whether they could suspend payments, in order to help cashflow problems.
Cavendish Ware associate director Roy McLoughlin says he has taken a number of such queries. “There is severe financial pressure on a lot of businesses. Pension payments are one of their major outgoings and suspending them for a six month period, for example, could make a significant difference.
“I am not saying whether this in the long term is the right thing to do – but at a time when both individual and corporate finances are under pressure it may help businesses survive, people keep their jobs, and rents and mortgages get paid.”
Buck head of retirement consulting Vishal Makkar says: “We are living in truly exceptional times with the Government trying to prevent both a health and economic crisis. With the Chancellor announcing a number of new measures to financially help businesses and individuals, it is perhaps not an unreasonable request from some companies to ask for a temporary reduction in deficit reduction contributions to support them in these difficult times.
“The reality is that despite Government intervention some businesses may not survive the next few months, including pension scheme sponsors who are currently considered to have strong covenants. The funding regime is designed to be flexible and, in some cases, particularly where companies provide clear justification and contingency support to trustees, a temporary suspension of contributions may give some companies enough breathing space to stay afloat so that they can start trading again as normal later in the year, meaning any missed contributions could ultimately be made good.
“It is vital that companies and trustees work together to secure an outcome that maximises the security of member benefits and ensures the sustainability of employers who may be under pressure in the coming months. At the same time, Trustees must ensure that they are in a position to address any member queries about their benefits and ensure pension payments continue to be paid in full and on time.”
