The new pension regulations came into force following the provisions of the Pension Act 2008 requiring all employers to put in place a workplace pension scheme which automatically enrols any eligible employees.
Staging dates have been put in place and larger companies will have their workplace pension schemes in full flow. It is now time for the smaller companies, including professional deputies to consider their responsibilities and obligations to comply with these regulations.
Under the generally wide terms of the Court of Protection orders, deputies often find themselves contracting for employment services provided to their client. The most common circumstance for many deputies is where a client has suffered a brain injury and requires a round the clock care team. In this situation it is normally cost effective to secure a directly employed care team rather than rely on agency staff.
In this instance the deputy will act as the employer to the care team which will kick in their responsibilities to provide the team with a workplace pension scheme. This is compulsory regardless of whether you directly employ one carer or a number of carers.
The deputy must at the very least undergo an assessment of their employees to see whether they meet the eligibility criteria. Broadly speaking those eligible are workers who are aged between 22 and the state pension age, earn at least £10,000 a year and work in the UK. The deputies must auto-enrol these eligible staff and make employer contributions.
Professional deputies must start planning now as it is suggested by the Pension’s Regulator that it could take around 12 months to set up auto enrolment. Deputies must start doing the following:
- Know your staging date – this is the date that your automatic enrolment duties start
- Check who you need to enrol by starting with the age and salary of every member of staff. It may be useful to then split your employees into three categories such as who you will need to enrol, who will be able to choose to opt in to enrolment and who will have a right to join.
- Create an action plan and research potential pension providers, work out the cost of contributions and decide on the management of the scheme.
- Check your payroll company to ensure that the payroll system can run an integrated complaint auto enrolment system.
- Enrol eligible staff and inform them how auto enrolment applies to them
- Complete declaration of compliance to the pension regulator
One crucial decision for the deputy will be choosing a pension scheme. It is important that the scheme is well run, offers good value of money for the deputy and the employees and that it will work with the payroll process or software that the deputy is currently using. At this stage the deputy may look for recommendations from their client’s case manager who might have some experience in dealing with auto enrolment or alternatively they may wish to seek financial advice.
Once the scheme has been set up, the deputies have an on-going obligation to review their employee’s eligibility to the workplace pension scheme. The deputy will be responsible for these ongoing management costs and all the costs associated with the scheme such as payroll costs, assessment costs, pension contributions and additional HR costs. Getting the scheme and management providers’ right is essential to a smooth running pension scheme.
There is no option to opt out so deputies must start planning now!