• The Pensions Regulator (TPR) adopts a risk-based approach to contribution monitoring so resource is focused on sectors or employers which it deems to represent the greatest level of risk to pension provision. The economic backdrop has changed significantly as a result of the global COVID-19 pandemic and we have seen TPR adapting its approach to reflect these conditions.

    Scottish Widows, as a pension administrator, has a duty to inform TPR when pension contributions have been in arrears for 90 days. After the outset of the pandemic, TPR temporarily relaxed that obligation, so that Scottish Widows was only required to notify TPR of arrears after a period of 150 days. However, normal reporting requirements resumed from 1st January 2021.

    If you have any concerns relating to your firm’s ability to maintain pension contributions you should contact TPR.

  • If a scheme has contributions on a set 1, 2 or 3 basis and the employer wants to amend the contribution basis for some or all of the employees before the end of the current certification period:

    1. If the new basis is on a qualifying earnings basis, no new certificate is needed. The employer amends the expiry date for the existing certificate so that it ends on the day after the change takes place.
    2. If the new basis is on a different set 1, 2, or 3 basis, the employer issues a new certificate with a start date which matches the start date of the change. It amends the expiry date of the existing certificate so that it ends on the day after the date of the change takes place
    3. If the change only applies to some employees, the new set 1, 2 or 3 certificates will have to identify which groups of employees it covers. That could be by name, job grade or other suitable category. This is in line with the existing rules that workforces can be segmented for pension contribution purposes.

    For detailed guidance, see the DWP guide (PDF, 322KB)– the information about amending certificates early is in section 4.1. There’s guidance on segmentation in section 5.6.

    See also TPR’s guidance for employer considering reducing contributions to the statutory minimums, which is available.