To ask the Chancellor of the Exchequer, whether employees who are members of a final salary pension scheme and whose wages are supported at less than 100 per cent under the Coronavirus Job Retention Scheme will experience a reduction to their pension entitlement if they retire while they are furloughed.
On Friday 20 March, the Government announced the unprecedented Coronavirus Job Retention Scheme to help firms keep millions of people in employment. All UK employers can apply for a grant that covers 80% of furloughed employees’ usual monthly wage costs, up to £2500 a month, plus the associated Employer National Insurance contributions and the equivalent of the minimum automatic enrolment employer pension contribution for a defined contribution scheme.
For members of final salary pension schemes, whether or not the act of being furloughed will affect member benefits will be dependent on individual scheme rules. Many schemes have provisions in place to account for reductions in income in the years leading up to retirement without it affecting their pension if, for example, members choose to work fewer hours ahead of retiring. How each scheme works is a matter for the trustees and the sponsoring employer.