Here at Parental Choice we have been inundated with calls from parents worried about the implementation of the auto-enrolment pension obligations that, from 1 June, will see families setting up and paying into a pension for their nannies. However, it’s not quite the panic that it may at first seem. It just pays to be organised.
Larger firms have had to set up schemes for their workers since 2012, but now anyone employing 50 employees or fewer must sign up all workers over the age of 22 who earn £10,000 or more, subject to receiving a letter from the Pensions Regulator stating when they need to start complying. The earliest is from 1 June 2015 and the latest is February 2018.
The letter will arrive about 12-18 months before the staging date, so if parents haven’t heard anything yet they’re likely to be one of the later ones. If they have received - and ignored - letters from The Pensions Regulator, they could be in line for a hefty fine.
So, just how much more will parents have to pay? A nanny earning £30,000, would cost you an extra £241 per year now, rising to £483 by October 2017. The key point is to make sure parents have agreed a gross salary with their nanny, otherwise their contributions will be double.
A nanny can opt out, but if parents are found to have induced her to opt out, they face a £400 fine. Also remember, if someone works just for one family, they cannot be classed as self-employed and further fines could be incurred if this is found out.
For many, these new pension contributions might mean a further reduction in nannies’ salaries or alternatively a fraudulent move to paying nannies cash in hand, which is not only illegal but unfair to nannies.
- Sarah-Jane Butler is the founder of Parental Choice, (www.parentalchoice.co.uk)
