Workplace pensions for nannies
All UK employers must formally assess their employees’ eligibility for a workplace pension, send letters to their employees confirming their status, and enrol their employees into a workplace pension scheme if they meet the criteria. Once enrolled into the pension scheme, both the employer and employee contribute to the pension.
What is Auto enrolment?
Auto enrolment is a government initiative which requires all UK employers to ‘automatically’ enrol any qualifying employees into a workplace pension scheme and make contributions towards that pension.
The employer must submit a ‘Declaration of Compliance’ to The Pensions Regulator within 5 months of becoming an employer.
Every three years the employer must also:
· ‘re-declare’ their compliance with The Pensions Regulator
· re-assess and potentially re-enrol employees who previously chose to leave the pension scheme.
The costs of Automatic Enrolment
The table below shows the minimum percentage that you, your nanny and the Government will contribute towards the pension.
Contributor | Minimum Contribution |
Employer | 3% |
Employee | 4% |
Government | 1% |
Total | 8% |
Does my nanny qualify for a workplace pension?
Your nanny qualifies for a pension scheme if they:
· Are aged between 22 years old and the State Pension Age.
· Earn £10,000 or above per annum.
What is the risk of not offering a pension scheme?
If an employer does not pay pension contributions that are due or declare their compliance, they can be fined by The Pensions Regulator.
What if my employee doesn’t qualify but still wants a pension?
If your employee does not qualify for a workplace pension, they still have the right to join one at any time by ‘opting in’.
What if my employee doesn't wish to join a pension scheme?
Even if your employee does not wish to join/remain in the pension scheme, it remains a legal requirement to enrol them into one initially (if they qualify).
Once an employee has been enrolled into a pension scheme, they can choose to either ‘opt out’ or ‘cease membership’ of the scheme:
Opt Out
Your employee has one month from the date they are enrolled to contact the pension scheme provider directly and ‘opt out’. A refund of any contributions paid is then processed.
Cease Membership
After the one month ‘opt out’ window ends, an employee can still request to ‘cease membership’. Any contributions made to that date would not be refunded but would remain in their pension pot.
What about a salary sacrifice scheme?
If your employee earns over £242 per week then it is likely you will save money (and so will they) by using our salary sacrifice pension scheme. You can check the exact savings by using our Tax Calculator. The salary after the sacrifice must still meet the National Minimum Wage requirements, but if you sign up to this service with us, we will automatically check this for you and let you know if this is not a suitable option for you.
This all sounds very complicated!
We know! But that's why we are here to do all of this for you as part of our pension service, there is nothing for you to worry about.