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Employer guidance where employees have a temporary reduction in hours

The below guidance is for employers where employees are not furloughed, but have a temporary reduction in hours applied. 

If an employee has a reduction in contractual hours (e.g. from whole-time to part-time) their pensionable pay will also reduce. As a result, the affected employee will accrue lower pension benefits during the period that their pay is reduced. The benefits they receive in retirement will therefore be permanently affected.

It is important to add that the reduction in pay is also likely to affect valuable life assurance benefits payable from the scheme when a member dies.

Whilst on reduced hours the member will pay employee contributions on their reduced pensionable pay using the same tiered rate as before any reduction was applied. Employer contributions will be paid on the salary actually received.