Most PAs we talk to don’t currently have a pension, but there are some important changes happening which you need to be aware of.
Are you aware of the changes in your rights regarding pensions?
Since October 2012 the government has been rolling out a workplace pensions scheme, which is known as Automatic Enrolment. All employers are now legally required to provide and make payments into a pension for certain staff. The law is the same whether you use a direct payment from your local authority, the NHS, or if you fund your own care and support.
Who is auto enrolled?
- PAs who are over 22 years of age and under the state pension age
- PAs who earn over £10,000 year, or £192.30 a week or £833.33 a month
For example, a PA who earns £8 per hour and works 25 hours per week would reach these levels. As an eligible person you will be automatically enrolled into a workplace pension scheme. You can opt out but will be automatically enrolled back in every three years. If you are not eligible you do not have to be auto-enrolled but will have the right to opt into a workplace pension if you earn above the lower earnings limit (currently £5824 per year) which the employer must pay into.
An Entitled Worker will have the right to join a workplace pension, but the employer does not have to contribute. If you are employed from state pension age up to the age of 75 and earn five thousand seven hundred and seventy two pounds or less you will be classified as an Entitled Worker.
If you are 75 and over, you do not have a right to be automatically enrolled or to join a workplace pension but should be included in the declaration of compliance.
When will this be happening?
The Pensions Regulator will tell each employer when they have to start on what is called their staging date at least 12 months beforehand and then again at 6 months and one month. This will be between 1 June 2015 to 1 April 2017 and will depend on their PAYE reference number. If your employer doesn’t comply they can end up with a fine of £400
Where does the money come from?
Contributions are made through 3 different contributors
- The Employer
- The Employee
- The Government
Each contributor will be expected to contribute a minimum amount and these amounts will eventually increase over a period of time. The law sets a minimum level of contributions to be paid by an employer. At the moment this is 1% of your earnings, but this will increase over the coming years.
The money should be figured into the care package that your employer has if they are not a self funder, but this is not guaranteed. Active independence has been talking with both Doncaster and Rotherham Borough councils about this issue for many months but at the time of writing no decision has been made about making sure this money will be added to people’s direct payment.
The most important thing is to talk to your employer about this.
Don’t forget, even if you believe you are self employed you may still be entitled to a pension as both HMRC and employment law consider that you are in fact employed unless you are registered as a care agency. See our March 2015 newsletter for more information on employment status.
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