By Lyndsey Hall
Employers of carers are being warned that they may be liable for workplace pension contributions, unless their employee opts out.
Up to 100,000 people who employ a personal carer or nanny are being told that they could be eligible for auto enrolment, and those who do not comply could receive a fine of £400. Under auto enrolment, employees over the age of twenty two who earn £10,000 or more per year will now have the right to a workplace pension, and employers will be required to contribute or risk hefty fines.
Since the programme was first launched in 2012, 5.2 million workers in 45,000 companies have joined the scheme, and an estimated 3.8 million more will be enrolled by 1.3 million employers between now and 2018. By now, all employers with over 30 employees should have a workplace pension scheme, however any businesses that took on an employee for the first time after 1 April 2012 will have an extension until 2017. Businesses with 30 or less employees are currently being enrolled onto the scheme gradually, between now and April 2017.
However, warning letters sent out by the Pensions Regulator to thousands of people who employ a carer or nanny have come as a surprise. Many elderly or disabled people whose carer is organised through the local authority may have their pension contributions paid for them, but it is unclear whether all local authorities will be willing to take on the extra costs of a pension.
Anyone who employs a carer on £15,000 a year will have to make contributions of £185 per year, however nannies can often make significantly more than this, meaning pension costs could be much higher for busy parents. Other employees, such as cleaners and gardeners, will only be affected if they earn over £10,000 per year.
Were you aware that personal carers were eligible for auto enrolment? How do you foresee this news affecting those who work as carers and nannies, and those who employ them? Let us know your thoughts in the comments or drop us a line on Facebook and Twitter.
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