There are various methods to calculating the portion of pension contributions that can be claimed under the scheme rules and can depend on current set-up.
NB: These are only examples; please ensure you process the best method applicable to your business that aligns with the legislation issued by HMRC and The Pension Regulator (TPR).
HMRC state that you cannot claim any automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income (above the lower limit of qualifying earnings which is £512 per month until 5th April and £520 per month from 6th April 2020 onwards but below the maximum of £2,500). There are a number of unclear points from the HMRC statement, including what happens to pension schemes that are a percentage of full salary and are not based on qualifying earnings above the lower limit. If you require further clarification, please contact HMRC & TPR.
Creating a specific Pension Scheme record for Furloughed Pension calculations
Note: The following suggestion assumes Advanced Pension Processing is in use and a separate Furloughed Payment Profile is being used.
With the use of Advanced Pensions, you could create a new scheme that will help calculate out the appropriate value and keep a history of the records without affecting the existing set-up and calculations.
NB: If you already calculate pension contributions between Automatic Enrolment (AE) LEL and UEL, and no EEs are paid more than £2,500 per month, then there’s no need to perform this step i.e. no additional scheme will be needed. Where furlough pay is being paid non-monthly, the LEL and UEL will need to be adjusted to suit the pay frequency applicable.