Auto-Enrolment – What is it and are you entitled to it?
You might have heard about auto-enrolment and pensions in the news. It’s been a big change to the pension system in the UK and affects most employees. If you’re working as an employed paid carer, you need to know what you are entitled to and ensure your employer is providing it.The idea of auto-enrolment is that more people start saving towards a pension from a younger age. This will help you in later life. The whole system has been simplified and the onus is on your employer to get your pension scheme set up. However, there are a few important points that you need to be aware of.Here we’ll explain what an auto-enrolment pension is, whether it applies to you and what you are entitled to.
Am I eligible for auto-enrolment?
[ADS]If you are an employee for anyone, you have certain rights towards auto-enrolment. It doesn’t matter if the person employing you is a client or a friend/family member, or an agency. As long as you are considered employed, auto-enrolment could apply to you.If you are over the age of 22 and earn more than £192 a week (or £833 a month, which is £10,000 a year), you are automatically eligible for auto-enrolment. If you’re between 16 and 21 and earn the same amount, you are not automatically eligible for auto-enrolment, but you can choose to opt in. This could be a sensible option, so that you can start saving towards your pension as early as possible. Your employer will also have to make minimum contributions to your pension scheme.If you earn less than this, but more than £118 a week, you can also opt in to the scheme. If you earn less than this per week, your employer can help you set up a pension scheme if you would like one, but they don’t have to pay in.
What do I have to pay?
If you are auto-enrolled into a pension scheme, both you and your employer will need to contribute. As of April 2019, the minimum contribution is 8% of your earnings, which is 5% from you and 3% from your employer. If you are paid via PAYE, this is taken at source and reflected on your payslip.Your employer can choose to offer higher contributions if they wish, which would be outlined in your contract.
Can I opt out?
If you are eligible for auto-enrolment, you can opt-out of the scheme if you wish. However, you must be enrolled first, as this is an obligation for your employer.If you opt-out within the first month of being added, you can get back any money you have paid in. However, if you opt-out later, you may not receive any payments back and they will still in your pension until you retire. Your employer is obliged to give you information on how to leave your pension scheme when the enrol you. You will need to contact your pension provider to opt out. You can re-enrol at any time by writing to your employer and asking to opt-in, as long as you meet the criteria. Your employer must re-enrol you every three years, if you remain eligible, but you can leave again.
Can I opt in?
If you are not eligible for auto-enrolment, you may still wish to set up a workplace pension scheme. You should talk to your employer. If you meet the minimum earning threshold, as outlined above, your employer should set up your pension scheme and pay in the minimum contributions.If you earn less, but still want a pension scheme, have a chat to your employer. They can help you set up a scheme, but they do not have to contribute.
What should my employer do?
It’s not uncommon to begin working for someone who has never been an employer before. This is especially true if you start working for someone you know and they begin to pay you to help care for them. It’s worth suggesting that they use a payroll service, such as the one offered by YTB. A payroll service takes on the work of calculating and generating payslips. The payroll service will work out all the auto-enrolment factors on their behalf and ensure that you are set up in a scheme. It will also do all the contribution calculations.Your employer must enrol you in a pension scheme if you are eligible. They need to write to you (even if it’s someone you know) and let you know when you are added to a scheme. The letter should also include information about the type of scheme you are in, how much your contributions will be, how much their contributions will be and how tax relief applies to you. This letter also gives you details on how to leave the scheme if you wish to opt-out.Your employer should never force you or encourage you to opt-out of a scheme, or treat your differently if you opt-out. If you have concerns about your pension scheme or your employer isn’t complying with their duties, you can contact The Pensions Regulator for advice.If you have any further questions about workplace pensions, the Gov.uk advice is a great starting point.