Pension Auto Enrolment

Brian Palmer

Reluctant employers face pensions red tape burden

By Brian Palmer. AAT Tax Policy Advisor

calculator and money

Are you a disabled person that employs a personal assistant?

If you are that’s great it probably means you are in control of your personal care needs – however does it also mean that you are a ‘reluctant employer’ who will now have to auto enrol your employee and make a pension contribution?

The law of unintended consequences

Listening to the Radio on the May Bank Holiday really opened my eyes about how the law of unintended consequences was about to hit disabled people (yet again).

This time it is in the guise of pension auto-enrolment a well intentioned move requiring every employer with at least one member of staff earning £10,000 and over to enrol their employee(s) into a workplace pension scheme and then to make contributions into it.

So you might ask what is wrong with that…you might even say “surely employers have a moral responsibility to contribute to the future well being of their employees?”

Well would you feel the same if you were the employer and you did not fit the normal employer model? For example, because you are employing a person to look after young children, you are elderly and no longer able to care for yourself or, as is often the case, you have a disability and have chosen to have control over your own care needs. Even if we discount the employers of childcare workers on the basis of the arrangement being a lifestyle choice, is it really right that the latter two categories, who are only employers out of necessity, are left to face the double-whammy of a much increased administration burden in undertaking the pension auto enrolment calculation?

Time to confess

Okay it’s time for me to make a confession; despite the fact that I have been actively involved in the review and submission of responses to consultations in respect of the design and implementation of pension auto-enrolment, until this weekend it had never crossed my mind that there were at least two large cohorts of what I call ‘reluctant employers’ who are going to potentially suffer under the new incoming regime.

I thought, surely The Pensions Regulator (TPR) would have already thought about the problem to be faced by disabled people who had taken advantage of the right to control the position of care payments.

A couple of clicks later and I landed on the TPR’s site home page and my optimism was sadly shown to be misplaced. About the one thing that I could say in the site’s favour was that it was mobile enabled.

Eventually with some help from Google I found under the employers section a section called “Automatic enrolment for people who employ their own care and support”.

Exceptional naivety

However, after a quick review of the page the third paragraph really astounded me through its display of exceptional naivety. At the end of the paragraph are what I am sure are intended to be reassuring words about the fact that if you employed your care worker via an agency “you don’t need to do anything”. Well yes true, you will have been relieved of your administration burden if you use an agency.

What the site fails to make any mention of is the increased costs that you will inevitably incur as a result of the move to pension auto-enrolment.

Ignoring the fact that agencies are highly likely to pass on the extra payroll costs that they will inevitably incur associated with achieving pension auto-enrolment compliance. Without a shadow of a doubt your agency costs will increase by £8.33 per month at the very least and will be set to increase again by the same amount in October 2017 and again in 2018. This is because £8.33 is the amount an employer will have to contribute into a pension under AE for a person earning £10,000 p.a.

The trouble I had

In an attempt to establish whether those who were given funds, either by a Local Authority or the NHS, in order to employ a care worker were going to receive additional funds sufficient to compensate them for their increased costs, I tried to get to the bottom of the situation by contacting the Department of Work and Pensions (DWP). Well…the trouble I had was rather reminiscent of the old consumer programs circular tales that always took the listener back to the start.

DWP told me to contact the carers allowance helpline, who in turn routed to me to my Local Authority who, rather helpfully, suggested that the DWP might be able to help. However, after I explained my tale of woe my Local Authority managed to put me in touch with their spokesman for adult social care. Who besides being a really nice human being had to confess that while what I was asking was a really good question it was one that he currently did not have an answer to. In fact, he expected to be having an internal meeting soon in which it would be considered whether they would be increasing payments to compensate those affected.

So what should I do?

In conclusion the only answer to the question that you will inevitably have “so what should I do” is….for the time being you will need to watch this space.

Until those who provide the funds that you require to pay carers have decided what to do about the unintended consequence arising out of pension auto-enrolment there is little else that can be done….other than to make it know that it would be wholly inappropriate for all of you who are in reality reluctant employers to be left picking up the cost through a failure to increase your funding.


Views expressed in this article are that of the authors.