Employers of carers remain unaware of their pension contribution obligations
Failure to comply for anyone with over four carers will lead to a daily £500 fine
Vulnerable clients who directly employ carers are being reminded that they have an obligation under the pension auto-enrolment scheme to set up and pay into a pension for their carer.
Failure to follow the rules could lead to a £400 fine, and continued failure to comply will result in a daily fine of £50 for anyone employing between one and four people. The staging date for companies with 30 employees or fewer commenced on 1 June 2015 and will run until 1 February 2018 to encompass all employment types.
Steve Moy, a wealth management consultant at St. James’s Place Wealth Management, believes that the problem has been partly caused by government’s inability to change the language used when dealing with businesses, and rephrasing it so that the layman can understand it.
Government advertising has been effective at letting employees know about the process’, Moy commented, ‘but we believe that more needs to be done to educate… those employing just one or two people. The language being used is still too complex and needs to be kept simple and jargon free so that the average man on the street can understand. In certain cases where the employment of carers is organised by the local authority, the pension contributions may be paid for them, however this does not apply in every case and depends on the local authority.
The Department for Work and Pensions (DWP) has been unable to clarify whether or not local authorities will meet the pension contributions for carers directly employed by the person receiving care. Anyone who is not paying an employee through the pay as you earn (PAYE) scheme (which is likely to include those with carers) has an automatic enrolment staging date of 1 April 2017.
Micro employers should start preparing for auto enrolment now and be seeking professional advice in good time, if they are unsure of their new responsibilities.
Petaurum Solutions’ Comment
The government has produced a hundred pages of legislation along with 300 pages of guidance from The Pensions Regulator. This has created 33 new mandatory responsibilities for employers in five key areas:
- Assessing workers
- Communicating with employees
- Data management
- Pension scheme implementation
- Record keeping and ongoing compliance
As the Personal Budget Holder is “the employer”, it is their responsibility to select the pension provider and ensure compliance with the legislation including communicating to the employee on their rights. However these individuals, by their nature, may not understand the requirement or be able to undertake the requirements, which will then leave the relevant public sector body (e.g. Local Authority) with the problem of chasing the required pension information from the Personal Budget Holders each pay period. Estimates have put the amount of data passed between different parties in a year to administer Auto Enrolment at c. 350 transactions – a huge transactional problem. It the Local Authority is the payroll provider they will be directly impacted by this legislation, as they will be required to provide on-going information to assist in the assessment of employees every pay period and administer the payment and refund processes.
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