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Individual Employers and Workplace Pension Schemes for Personal Assistants

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Disability Rights UK Factsheet F61

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Introduction

In 2012 the United Kingdom government introduced new pensions legislation.  One of the requirements of this legislation is that all employers automatically enrol certain employees into a workplace pension.

Disabled People who are Individual Employers employing Personal Assistants will have to consider whether their Personal Assistants qualify to be automatically enrolled into a workplace pension. They will therefore have new obligations to take into account, similar to Income Tax and National Insurance.

If you are an Individual Employer you will need to check whether your Personal Assistant is a “qualifying employee”.  All employees who must be automatically enrolled or who have a right to join a workplace pensionare put into one of three categories, so you will need to check whether your Personal Assistant falls into one of these categories.  They  are based on people’s age and their earnings.

Qualifying Employees

  1.  An Eligible Jobholder will have to be auto-enrolled into a workplace pension. They can opt out but will be automatically enrolled back in every 3 years
  2. A Non-eligible Jobholder does not have to be auto-enrolled but will have the right to opt into a workplace pension which the employer must pay into.
  3. An Entitled Worker will have the right to join a workplace pension, but the employer does not have to contribute.

The information below will help to determine which category your employees are in depending on their age and earnings. Those who are outside the three categories do not have a right to be automatically enrolled or to join a workplace pension:

  1. Employees under 16, regardless of the amount they earn do not have a right to be automatically enrolled or to join a workplace pension but should be included in the declaration of compliance (see below).
  2. For those between the ages of 16 and 22  years old, where someone earns £5,772  or less, they will be an “entitled worker”, for this age group that earn over £5,772 they will be “non-eligible jobholders”.
  3. For those who are 22 and over but below pension age, where someone earns r £5,772 or less they will be an “entitled worker”,  where someone in this age group earns over £5,772 but no more than £10,000 they will be classified as “non-eligible jobholder”.  If the employee earns over £10,000 then they will be classified as an “Eligible Jobholder”.
  4. For those people employed from pension age up to the age of 75 and they earn £5,772 or less they will be classified as an “Entitled Worker”.  For those earning  over £5,772, they will be classified as “Non-Eligible Jobholders”.
  5. Employees who are 75  and over, do not have a right to be automatically enrolled or to join a workplace pension but should be included in the declaration of compliance (see below).

When do I need to implement a Workplace Pension?

Each employer will have a staging date which is the date that the new duties first apply to them. Individual Employers with fewer than 50 Personal Assistants could have a staging date at any time between 1st June 2015 and 1st February 2018.  The Pensions Regulator will tell each employer what their staging date is at least 12 months beforehand and will continue to communicate with them at regular intervals via letter and email.  If you want to work out your own staging date you can do so here:

 http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx

It is important to work out exactly what your duties will be prior to your staging date as, depending on the category your employee(s) fall into, you may need to start making contributions to a workplace pension for them with effect from this date.

Also, in order to  demonstrate compliance with the employer duties, every employer is required to submit  a declaration of compliance to  the Pensions Regulator within five months of their staging date (visit www.thepensionsregulator.gov.uk  for more details). This applies to all employers with at least one worker, regardless of age or earnings.

How much is the Workplace Pension going to cost Individual Employers?

Contributions are made through 3 different contributors, The Employer, the Employee and the Government.  Each contributor will be expected to contribute a minimum amount and these amounts will eventually increase over a period of time.

Brief Case Studies

Fiona works for Sue. Sue employs Fiona for eight hours per week, Fiona is 46 years old she receives £9 per hour, soshe is an entitled workerHowever, if Fiona wants to contribute to a workplace pension she has the right to do so and Sue will have to arrange membership for her.  Sue will also need to submit a declaration of complianceto the Pensions Regulator regardless of whether Fiona decides to contribute to a workplace scheme.

 

Jim works for Robin. Robin employs Jim for 35 hours per week and pays him £8.50 per hour.  Jim is 35 and is over the £10,000 threshold. Jim falls into the Eligible Jobholder category.  Robin will need to enrol Jim into workplace pension and make employer contributions. Jim might want to “opt out” of the workplace pension and if he does he will need to complete an “opt out” form and give it to his employer, Robin.  If he chooses to opt in at a later stage his employer will need to allow him to do this.. Robin will also need to submit a declaration of compliance to the Pensions Regulator.

 

The contribution rates are being phased in.These are identified below and demonstrate the minimum percentage by each contributor and the dates when it will increase.

  1. Up to 30 September 2017 - The total contribution to a workplace pension will be 2%.  This is made up by a contribution of 0.8% from the Employee, 1% from the Employer and 0.2% from the Government.
  2. 1 October 2017 to 30 September 2018 - The total contribution to a workplace pension will be 5%.  This is made up by a contribution of 2.4% from the Employee, 2% from the Employer and 0.6% from the Government.
  3. 1 October 2018 and onwards - The total contribution to a workplace pension will be 8%.  This is made up by a contribution of 4% from the Employee, 3% from the Employer and 1% from the Government.

Further information can be found on the following websites:

http://www.pensionsadvisoryservice.org.uk

http://www.thepensionsregulator.gov.uk/automatic-enrolment.aspx?campaign=087DWPemployers2014

https://www.moneyadviceservice.org.uk/en/articles/automatic-enrolment-into-a-workplace-pension

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/299886/auto-key-facts-enrolment-booklet.pdf

Please ensure you seek advice on your responsibilities to enrol your Personal Assistants into a Workplace pension. 

Direct Payment employers should check with their payroll provider the level of assistance they can provide.

Where can I get more help or information?

This factsheet is a basic overview of workplace pensions for personal assistants. We have other publications concerned with independent living in our shop at https://www.disabilityrightsuk.org/shop

You can also place orders by contacting Disability Rights UK.

For further help and information please contact our Advice Line- 0330 995 0404.

You can get more information about where to get personal advice from our Factsheet F15 - Getting advice. All our factsheets are free to download on our website at disabilityrightsuk.org. We have a number of independent living factsheets.

To find out more about an organization in your local area that is run and controlled by disabled people check out Disability Rights UK membership on disabilityrightsuk.org

Organizations run and controlled by disabled people in your area may be able to support you to have more choice and control in your life and support your journey to independent living.  Further information is available to secure independent living through disabilityrightsuk.org/how-we-can-help/independent-living

Sandra Marshall
24 March 2016

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