I received an email yesterday on behalf of the Pensions Regulator, with information regarding auto enrolment and FAQ’s for people employing Nannies.
I always recommend people to go to the experts – for the sake of £5 a week you can be headache free! Please tell them that Norma Lewis recommended you!
Automatic enrolment for people who employ nannies
In the past, workplace pension schemes weren’t available to everyone – not all employers offered them, while some people felt that they couldn’t afford to pay into them every month.
Thanks to the introduction of automatic enrolment though, millions more people now have a way to save for the future. This means that anyone who is paid to work and meets certain age and earnings criteria has a right to a pension scheme – including domestic workers like nannies. If you directly pay someone to look after your children – a nanny, for example – you’re an employer and will need to ensure that any eligible staff are enrolled.
Automatic enrolment was introduced in 2012, with larger employers the first to put their staff into pension schemes and contribute towards them. Now it’s the turn of smaller employers to help their employees save for their retirement.
It’s called automatic enrolment because it’s automatic to anyone you pay to work for you. It’s not automatic to you as their employer though, so you’ll need to prepare. For example, you’ll need to set up a pension scheme and make sure that you have a payroll process in place which meets the requirements of automatic enrolment.
Automatic enrolment applies to anyone who has at least one member of staff other than themselves. It doesn’t just apply to businesses though. If you employ one or more people to care for your children, automatic enrolment duties will apply to you. If your nanny is aged 22 or over (and under state pension age), and you pay them over £192 a week or £833 a month, you’ll need to provide a pension for them.
Automatic enrolment will affect you from what is known as your ‘staging date’. By the time you reach this date, you should be ready to put your staff into a pension scheme, so you’ll need to be well prepared by this time. Our staging date tool will tell you your staging date. We recommend that you find out your staging date today – you’ll need your PAYE reference to hand.
We also recommend starting your preparations up to a year before your staging date to avoid a last-minute rush. Our step-by-step guide to automatic enrolment has been designed to help employers complete the 11 steps of the automatic enrolment process. You can then create your action plan for automatic enrolment, which will help you work out what you need to do and when you need to do it by.
Automatic enrolment for people who employ nannies
Does automatic enrolment apply to me if I employ a nanny?
If you directly employ one or more people to care for your children, you’re an employer and automatic enrolment duties will apply to you.
Automatic enrolment is similar to your employer responsibility to deal with National Insurance and tax. So, in the same way that you pay employer National Insurance in respect of your nanny and deduct PAYE tax from their pay, you may also need to put your nanny into a pension scheme and pay money into it on their behalf. Whether you need to automatically enrol them will depend on their age and earnings.
Automatic enrolment applies to you from a date known as your staging date. Use our tool to find out your staging date. [LINK TO: http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx]
What are the circumstances in which I need to automatically enrol my nanny into a pension scheme?
If your nanny is aged between 22 and the State Pension Age and you pay them more than £192 a week, you’ll have to put them into a pension scheme and pay contributions to that pension scheme.
If your nanny is aged under 22 or over the State Pension Age, or if you pay them less than £192 a week, you don’t have to put them into a pension scheme. But you’ll need to give them the option to join a scheme, unless they are aged under 16 or over 74. If they do join, in some cases this will mean you have to pay contributions to the scheme on their behalf.
If you employ more than one nanny, the duties will apply to each of them individually.
Will duties apply if my nanny is part time or has a second job elsewhere?
If you employ anyone, duties will apply to you, regardless of the number of hours they work for you or if they have another job. Your duties will depend on their age and how much you pay them, regardless of any other earnings they may have.
If your nanny is aged between 22 and the State Pension Age and you pay them more than £192 a week, you’ll have to put them into a pension scheme and pay contributions.
If they don’t fall into this category, you may need to offer them the opportunity to opt in to or join a pension scheme. Find out more in check who you need to enrol. [LINK TO: http://www.thepensionsregulator.gov.uk/employers/check-who-you-need-to-enrol.aspx]
If your nanny has another job, they may have a right to another pension scheme with their other employer, but that has no impact on your duties.
Will I have duties if I employ a nanny through an agency?
If your nanny’s wages are paid by an agency, the agency is considered to be the employer. This means that you will not have duties.
How do I know which pension scheme to use for my nanny?
There are a number of pension schemes that will accept employers like you. One is the National Employment Savings Trust (NEST), which is a pension scheme set up by the Government that must accept all employers who wish to use it for automatic enrolment. This is just one option, however, and other providers are available.
It’s important to remember that, if you need to set up a pension scheme for your nanny, you should not leave it until the last minute. For more information go to choose a pension scheme (or check your existing one). [LINK TO: http://www.thepensionsregulator.gov.uk/employers/choose-a-pension-scheme-or-check-your-existing-one.aspx]
Do I still have to automatically enrol my nanny if they don’t want to be in a scheme?
Yes. If your nanny meets the age and earnings thresholds to be automatically enrolled, you must put them into a pension scheme. It is then up to them whether they opt out of it. Find out more about opting out. [LINK TO: http://www.thepensionsregulator.gov.uk/employers/opting-out.aspx]
How much will pension contributions cost me?
The law sets a minimum level of contributions to be paid by an employer. At the moment this is 1% of your nanny’s earnings, but this will increase over the coming years. See our general automatic enrolment queries. [LINK TO: http://www.thepensionsregulator.gov.uk/automatic-enrolment-enquiries.aspx#s7575]
Our website has more information on how much you must pay. [LINK TO: http://www.thepensionsregulator.gov.uk/employers/employer-contributions.aspx]
If I hire a nanny in the future will I have to provide a pension?
Yes, if they meet the age and earnings thresholds to be automatically enrolled, you will have to put them into a pension scheme and pay contributions. Find out more in check who you need to enrol. [LINK TO: http://www.thepensionsregulator.gov.uk/employers/check-who-you-need-to-enrol.aspx]