The government has confirmed grants to pay workers' wages during the coronavirus crisis will also cover employer auto-enrolment (AE) pension contributions.
This forms part of the government's announced last week, in which it agreed to pay 80% of salaries for employees who are asked to stop working but kept on the company payroll - or 'furloughed' - during the coronavirus crisis.
The rules - which apply to furloughed staff enrolled into a defined contribution (DC) workplace pension - will see the government pay minimum AE employer contributions worth 3% based on the furloughed salary, which will be capped at £2,500 a month.
Read on to learn more about how AE works and how the reduced contributions could affect your savings.
Auto-enrolment or AE is a government initiative introduced in 2012 that requires all employers in the UK to put their qualifying staff into a workplace pension scheme.
You and your employer will pay contributions to your pension, which is then invested and managed by your pension provider until you retire.
You qualify for AE if:
The contributions you and your employer make will be calculated on your 'qualifying earnings', which is set between £6,240 and £50,000.
There are minimum contributions you and your employer must pay.
Since last April, total minimum contributions have rested at 8%, with a minimum of 5% paid by you and 3% from your employer.
There are no plans at the moment to increase this, but trade bodies such as the Pensions and Lifetime Savings Association and industry experts argue that at least 12% is required for a decent retirement pot.
Employers may pay more towards staff pensions if they wish, and you can put in extra money, too.
On top of your employer contributions, the government gives you tax relief on your contributions; basic-rate taxpayers get 20% pension tax relief and higher-rate taxpayers can claim 40% pension tax relief.
The promise to pay 80% of salaries for the workers that are kept on during the crisis is a big commitment from the government.
Given the cost, it had been feared that auto-enrolment contributions would be put on ice.
However, the government's commitment to pay some of the pension contributions workers are entitled to during the coronavirus pandemic means pension savings can carry on.
The amount you get in your pension normally depends on how much your employer contributes and how much you earn.
With furloughed staff, the contribution will be set at the minimum 3% and capped at the furloughed salary up to the monthly £2,500 limit.
You will still need to pay the 5% contribution to get the government's contribution.
The table below shows how being furloughed could affect someone earning either £30,000 or £50,000 in 2020-21 paying in the AE minimum of 8%.
If your employer contributes above the minimum usually, you could be missing out on a fair bit more.
If you're in a position where you feel you can add in the extra money yourself, you should tell your employer or pension provider you want to up your contributions.
If your pay has been affected by coronavirus, or you simply want to cut down on costs during this time you can opt-out of paying into your pension.
However, saving for retirement is really important, so you should only really be doing this if you need the money right now to pay essential costs.
Opting out involves getting an opt-out form from your pension provider or doing so via an online account. You can get contact details of the pension company from your employer.
If the form is completed and returned to your employer within one month of being automatically enrolled, any money you have paid into the pension will be refunded, otherwise, the money will be held in the scheme until you can access it.
If you wish to opt back into your pension, you'll need to ask your employer.
Self-employed workers aren't automatically enrolled into a pension scheme.
However, it's still sensible to plan for your retirement and start a pension if you can.
Rises or falls in the stock market affect how much is in your overall pension pot, too.
For example, if you have a DC pension - whether private or through work - your savings have probably also been hit quite hard in the short term.