Do you need to pay your carer a pension?
If you employ you own paid carer, then you have certain responsibilities as an employer, such as issuing pay slips, giving holiday and sick pay, and meeting the minimum wage. Now, pension rules are changing and you may have to take paying your carer a pension into consideration as well.
The new rules regarding pensions, which came into force at the beginning of June, mean that anyone over the age of 22 and earning more than £10,000 a year (£192 gross a week; £833 gross a month) is entitled to a workplace pension, unless they choose to opt out.
This threshold means that it is unlikely to affect those who employ a carer for just a couple of hours a week, as they will be under the £10,000 wage, however, if you choose to increase their hours, then you need to be aware of the pension rules for when they start to affect you.
According to a report by the BBC, up to 100,00 employers of personal carers could be affected, and non-compliance can lead to a fine of £400. Letters have been sent out to some individual employers warning them of the changes, which in many cases have come out of the blue. The report says that those who hire a carer for £15,000 a year would have to pay around £185 a year in pension contributions. This is worked out by exempting the first £5,824 and anything earned over £42,385.
There are some exceptions that might affect whether or not you have to pay your carer immediately, even if you are paying them over the £10,000 wage. If you hired a carer for the first time after 1 April 2012, then you will not have to pay pension contributions for another two years.
Also, you may not have to pay immediately, as the automatic enrolment scheme is being fazed gradually from June 2015 to April 2017 in a “random date lottery”, according to a report in The Telegraph.
These rules will affect you whether you are a self-payer or whether you receive a Personal Budget as a direct payment from your local authority that you use to hire a paid carer – if you are the employer, you are responsible. The pensions scheme will also affect those who have their carer arranged and paid for by the local authority. Those carers will also have a right to a pension scheme if they are eligible, which may be paid for by the local authority. It is thought that some councils may introduce a price hike to pay for these charges, says a report on thisismoney.co.uk.
If you think that you need to pay your carer a pension, then you can find out more about it on The Pensions Regulator website. The automatic enrolment means that your employee is automatically enrolled, but you, as the employer, need to take steps to ensure that your eligible staff are enrolled into a pension scheme. The Pension Regulator website has a step-by-step guide to help you with this.
You may already use a payroll service to do your financial admin, such as issuing payslips or dealing with HMRC, and these companies should also be able to deal with your pension requirements so that you just transfer the right money to them each month and they put it in the right places. You’re the Boss offers a payroll service and you can get in touch to find out more.