Pensions for Nannies – Automatic Enrolment 

 

As you are probably aware the law on workplace pensions has recently changed. Every employer including those of Nannies and Domestic Staff now has new duties.  This includes enrolling those who are eligible into a workplace pension scheme and contributing towards it.

 

It is called Automatic Enrolment because it is automatic for your staff, they don’t have to do anything to be enrolled into your pension scheme.  However it is not automatic for you as the employer.   You need to take steps to make sure your eligible staff are enrolled into a pension scheme.

 

Small employers including those of Nannies and Domestic Staff are being phased in from 01/06/2015 until 01/02/2018.

 

Employers will need to comply with this law or face fines of £400 + £50 per day for non-compliance.

 

If you are an employer The Pensions Regulator will write to you and inform you of your staging date. Alternatively you can ask your payroll provider for the staging date or visit The Pensions Regulator website to find it http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx

 

When The Pensions Regulator writes to you as an employer, you must provide them with a point of contact.  The primary contact should be the employer the secondary contact can be your payroll provider. You can nominate a contact on The Pension Regulator website.

You will have to assess all your staff for eligibility but you may not have to automatically enrol them.

 

The table below outlines your duties depending on the salary of your employee;

#

 Age from 16 – 21y

From 22y to SPA

 From SPA to 74y
£486 and below
Has a right to join a pension scheme (1)
Has a right to join a pension scheme (1)
Has a right to join a pension scheme (1)
Over £486 – £833
Has a right to Opt in (2)
Has a right to Opt in (2)
Has a right to Opt in (2)
Over £833
Has a right to Opt in (2)
 Automatically Enrol (3)
Has a right to Opt in (2)

Figures correct as of 2015/2016. *SPA = state pension age

(1) Has a right to join a pension scheme – If they ask you to, you must provide a pension scheme for them, but you don’t have to pay contributions. 

(2) Has a right to opt in – If they ask to be put into a pension scheme, you must put them in your automatic enrolment pension scheme and pay regular contributions. 

(3) Automatically enrol – You must put these members of staff in your automatic enrolment pension scheme and pay regular contributions. You don’t need to ask their permission. If they give notice, or you give them notice, to leave employment before you have completed this process, you have a choice whether to automatically enrol them or not.  

 

It is against the law to try to influence your staff into opting out of your pension scheme.

 

It may be that you do not have to automatically enrol anyone, but you will still have other duties to fulfil to your employee(s) and The Pension Regulator.

 

The pensions will need to be calculated through your payroll provider; However as an employer it is your responsibility to decide who you wish to use to provide a pension for your employee(s).

The Government has set up a pension scheme called the National Employment Savings Trust (NEST) to accept all small employers wishing to use the scheme for Automatic Enrolment. This is one option, and there are other providers available you can find more details on choosing a pension scheme via the following link: www.tpr.gov.uk/scheme

 

For Automatic Enrolment there are minimum contributions you must pay in order to comply with your duties. Please see the table below:

DATE

Employers / Employees Contribution

Government Contribution

Total  Contribution
Before 05/04/2018
1% / 0.8%
0.2%
2%
06/04/2018 – 05/04/2019
2% / 2.4%
0.6%
5%
06/04/2019 onwards
3% / 4%
1%
8%

The amount you will need to pay as an employer into the pension scheme is based upon your employees (nannies) gross pay. However if you have agreed a net pay with your employee (nanny) you as the employer, are responsible for paying both yours and your employees (nannies) contributions.

 

The costs for the pension are based on three people paying in: the employer, employee and the government. You will all be contributing on a percentage which is detailed above. The % contribution does not have to be paid on the whole salary. It can be paid on something called ‘Qualifying Earnings’. Using Qualifying Earnings means that you only pay a pension contribution on part of the gross salary, rather than the whole salary.

 

Records must be maintained for your Automatic Enrolment activities they include correspondence to employees, information you send to the pension provider and copies of any opt-out requests.

Information will need to be sent to your pension provider and payment for the Pension Contributions must be made on time.

 

Employers must complete the declaration of compliance with The Pension Regulator within 5 months of their staging date.

 

 

Useful Links 

NEST Pensions

www.nestpensions.org.uk The Pensions Regulator www.thepensionsregulator.gov.uk

 

Way2paye Limited

www.way2paye.co.uk Email: Payroll@way2paye.co.uk Tel: 01604 743 346

 

 

Thank you to Way2paye for supplying this information.