When family members assume the role of carers for relatives unable to manage their own affairs, they navigate a complex mix of emotional commitments and financial realities. The Court of Protection aids this transition through family care payments. However, the long-term financial well-being of these carers, particularly in terms of their pensions, is an aspect that’s often overlooked. While managing personal finances remains the carers’ responsibility, this issue underscores the importance of considering the family’s financial stability. It reflects on the deputy’s comprehensive role in safeguarding ‘P’s best interests, extending to the financial security of the family. What are Family Care Payments? Family care payments are designed to compensate family members for the extensive care they provide to ‘P’, care that would otherwise necessitate engaging costly professional services. This arrangement not only offers ‘P’ care within the familiar and comforting confines of their own home, but often results in significantly better personal well-being outcomes. Guided by deputies, the calculation of these payments considers ‘P’s financial resources, the level, and intensity of care provided, and how these costs compare to professional care services. Notably, the rates for family care payments are usually more generous than the carer’s previous salary, reflecting the absence of formal employment protections such as sick pay and holiday pay. Moreover, these payments are structured to be non-taxable, providing a direct financial benefit to the carer. However, it’s important to recognise that in accepting these payments, carers do not receive the same employment protections and benefits that professional carers might have, underscoring the unique nature of their commitment to ‘P’s care. Who decides the Family Care Payment? Deputies play a pivotal role in determining the rate of family care payments, exercising their authority to ensure these payments are both fair and sustainable. This involves a comprehensive evaluation of ‘P’s needs, the extent, and nature of care provided by family members, and ‘P’s financial ability to remunerate their carers. In making these decisions, deputies are guided by the principles set out by the Office of the Public Guardian (OPG) and the Court, aiming to find a balance that not only upholds ‘P’s best interests but also recognises the significant dedication of the carer. It is the deputy, authorised and informed by the OPG’s guidance and the Court’s directives, who ultimately decides on the appropriate rate of family care payments. While family care payments can be substantial, they do not inherently include pension contributions. This absence can lead to a notable pension gap over time. For instance, recent reports indicate that a carer stepping out of the workforce to provide full-time care could face a pension shortfall of up to £30,000 by retirement. This figure is based on the loss of employer pension contributions, compounded over the years of potential employment missed. The impact on pension savings can be stark. To illustrate the potential impact, let’s consider a hypothetical scenario. Imagine a family carer, Alex, who leaves a job at age 40 to provide full-time care, receiving an annual family care payment of £35,000 but making no pension contributions during this caregiving period. Assuming Alex could have contributed 8% of a £30,000 salary to a pension, with an employer matching 3%, the total annual contribution would be £3,300. Had Alex continued working until the state retirement age of 67, with a 5% annual growth rate in their pension fund, their pension pot could have grown to approximately £500,000. The 10-year caregiving break could lead to a shortfall of over £100,000 in Alex’s pension pot, illustrating the significant long-term financial impact caregiving can have. This scenario underscores the importance of considering long-term financial planning for family carers. While family care payments address immediate financial needs and compensate for the invaluable care provided, they may not fully account for the future pension shortfall. Engaging with a financial advisor could help carers like Alex explore options such as making voluntary National Insurance contributions or investing in a personal pension plan to mitigate this gap. Our role as deputies In our role as deputies, we recognise the critical importance of safeguarding ‘P’s financial well-being and the broader impact of the financial decisions we make on their behalf. A key part of protecting ‘P’s best interests involves ensuring the stability of their support system. This requires us to carefully balance the calculation of family care payments, acknowledging the profound commitment of carers while navigating the complexities of their financial futures. While it is essential for carers to seek independent financial and pension advice, our encouragement must be measured to maintain our primary focus on ‘P’s needs. Together with professional financial insight, we may explore whether formal employment arrangements for carers, complete with employment protections and pension contributions, could offer a more sustainable solution. Each case demands a tailored approach, reflecting the unique circumstances of ‘P’ and their care network. If you have any questions related to this article, or would like further information on our Court of Protection services, please get in contact with us by emailing Courtofprotection@boyesturner.com.
