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How does ‘The Pensions Regulator Auto-Enrolment’ impact on my ‘Direct Payments’ care options?

Do you receive Direct Payments to be used for the care of your child? If so, you may have received a letter from The Pensions Regulator explaining your responsibilities as an employer with regards to setting up a pension scheme for your Carer. We have produced the below information to help you understand your duties, and whether you need to act accordingly to comply with pension regulation.

Who are The Pensions Regulator?

The Pensions Regulator is responsible for ensuring that all employers comply with workplace pension law in the UK. All employers, including some people receiving Direct Payments will need to set up an ‘auto-enrolment’ pension scheme, and/or complete a ‘Declaration of Compliance’.

Does this sound complicated to the average parent receiving ‘Direct Payments’?

Yes.

Is it complicated, or does it have to be complicated for parents receiving ‘Direct Payments?

No. And we hope to clarify this below:

  1. Do you use your Direct Payments to pay a care company to deliver your child’s care?

Yes: The care company is therefore the employer, and responsible for setting up the pension scheme for the carer if applicable. If you have received the ‘Act Now’ letter from ‘The Pensions Regulator’ contact 0345 600 1011 to discuss the situation with them (charges may apply).

No: Go to question 2.

  1. Do you use your Direct Payments to pay a self-employed carer to deliver your child’s care?

Yes: The self-employed carer is responsible for their own pension scheme. If you have received the ‘Act Now’ letter from ‘The Pensions Regulator’ contact 0345 600 1011 to discuss the situation with them (charges may apply).

No: Go to question 3.

  1. Do you use your Direct Payments to pay a carer through a PAYE payment scheme, effectively becoming the carers employer?

Yes: Go to question 4.

No: Check your answers to questions 2 and 3.

  1. Have you received the ‘Act Now’ letter from ‘The Pensions Regulator’?

Yes: You will need to follow the instructions on the ‘Act Now’ letter. Before doing so, go to question 5.

No: Contact ‘The Pensions Regulator’ to establish why you will not receive the ‘Act Now’ letter, and to establish whether your responsibilities as an Employer. Contact 0345 600 1011 (charges may apply).

  1. Do all of your carers fit under all of the following categories?
    1. Earn less than £192 per week (or £833 per month)
    2. Aged 21 or below
    3. Over state pension age

 

Yes: You won’t need to set up an auto-enrolment pension scheme with a pension provider. However, you will need to follow the instructions given on your ‘Act Now’ letter. You’ll need to answer some simple questions on the ‘Duties Checker’ on the following web address: www.tpr.gov.uk/stage-duties. You will also need to confirm your ‘contact details’ on the following web address: www.tpr.gov.uk/stage-nominate. Finally, you’ll need to send your carers a care pension scheme letter: Click Link. You will also have to complete your ‘Declaration of Compliance’ by following this web link: https://www.autoenrol.tpr.gov.uk/. Before completing the ‘Declaration of Compliance’ you will be asked to enrol for a Government Gateway User ID. The ‘Duties Checker’ section of The Pensions Regulator website will prompt you to do this. Keep hold of the ‘letter’ you’ve sent to your employee(s) and the ‘Declaration of Compliance’ document once you completed the above steps.

No: You are likely to be in a position where you have to set up a pension scheme for your carers. There may be a simple solution to this. The best thing to do is to follow the instructions found on your ‘Act Now’ letter from ‘The Pensions Regulator’. You’ll need to answer some simple questions on the ‘Duties Checker’ on the following web address: www.tpr.gov.uk/stage-duties. You will also need to confirm your ‘contact details’ on the following web address: www.tpr.gov.uk/stage-nominate.

If you are required to set up a pension scheme for your employee(s), i.e. the Carer(s) you pay through PAYE, you have the following options:

  1. Check with the trust/council paying you your direct payments whether you can use the direct payments to cover the cost of setting up the auto-enrolment scheme. In most cases you should be able to do this. Ask for advice from the trust/council, your accountant, or a financial advisor about options for the selection of an appropriate pension scheme. Set up a scheme and inform ‘The Pensions Regulator’ once you have done so. You’ll then need to complete your ‘Declaration of Compliance’ as normal.
  2. You may decide to not continue with the PAYE scheme. If this is the case, you could either pay a self-employed carer, or appoint an agency or care company to manage the payments to a Carer. You may not want to lose the current individual you have in place for the care of your child, so your decision may involve a change in circumstances for the Carer. It’s important at this stage that you respect the Carer’s rights, and comply with Employment Law before making a decision on what to do next. Seek advice from a HR advisor or ACAS if this is the case. In some circumstances a Carer who is a close family member may be happy to be employed by a care company or become self-employed, depending on their circumstances, especially if this makes things easier for you as the parent, or responsible person.

We hope that the above information is helpful. The Pension Regulator has a customer service number: 0345 600 1011, and can provide additional information and clarification if required.

Note: this advice is solely focussed on pensions, and information regarding insurance, employment law, and vetting etc is the responsibility of the people appointing the carer, i.e. the employer.