With more and more families making the news because they rely on grand parents as their first line of child care, many who aren’t lucky enough to have grandma or grandad on the doorstep, but can afford it, avail themselves of the services of a nanny.
No matter whether a family chooses a nanny for flexibility reasons or to give their children exposure to another language or culture, the convenience of a live-in, or indeed live-out nanny is clear to see. But one big question on the lips of a number of parents who employ nannies right now is whether or not they will have to fund for their nanny’s pension under automatic enrolment legislation?
Pensions automatic enrolment is a relatively new kid on the pensions legislation block. Requiring employees to put pension arrangements in place for their employees, as well as contributing to those employees’ pensions, auto enrolment started in 2012 and will have completed its roll-out by 2018.
The response to the question about whether or not a nanny should be enrolled in a pension scheme under auto enrolment is: more than likely. It is likely that most nanny arrangements will fall under the qualifying requirements of the scheme.
The rules say that any employee (and that includes a nanny) aged between 22 years of age and state retirement age, who earns above the current tax free allowance must be automatically enrolled. State pension age varies depending on your nanny’s date of birth, but State Pension Age Calculators are readily available online for anyone who is unsure. No matter whether your nanny works full or part time; if he or she falls within these qualifying rules, it is your responsibility as his or her employer to set up an appropriate pension scheme, automatically enroll them into it and make pension contributions.
Once enrolled into your pension scheme, your nanny, you and the government will be required to make contributions. The contributions will start at a relatively low level and will rise gradually over the early years; so this should not prove a particularly onerous obligation. However, it is up to you as the employer to provide an appropriate scheme; to know when you need to start and to be clear about what you need to tell your nanny as well as taking responsibility for administering the required contributions to the scheme.
The date you need to start to implement this new legislation is called your ‘staging date’ and when that date is will depends on when you started to employ your nanny. For example, if your nanny’s employment started before 1st April, 2012 you are likely to have your staging date from June of this year. However, if you didn’t start to employ your nanny until March of this year, your staging date won’t probably be until October 2017. Once again, you can find your staging dates online.
Although your responsibilities as an employer are relatively straightforward, you need to set aside some time to familiarise yourself with those responsibilities and your options.
There is plenty of help available online or you could consult the person who deals with your nanny’s PAYE. However, if you’d like some help from us, we’d be more than happy to help. All you need to do is contact us.