Do I need to provide a pension for my nanny?
Yes. If your nanny…
- is aged over 22 and under state pension age
- earns over £10,000 gross per year (that’s £833/month and £192/week)
… then you have to start to provide a pension in the pay period that your ‘Staging Date’ occurs (more on that below). If you don’t, you could be fined by the Pensions Regulator.
Your employee can opt out of receiving a pension, but there are strict rules around this and you certainly can’t encourage it.
If your nanny earns under £10,000 gross per year, your obligations are only slightly different. You still have to make it possible to join a pension, just without automatically enrolling your nanny in it. If your nanny’s pay goes above the threshold at any point, they will need to be automatically enrolled (even if it drops back down again).
Okay, so I have to provide a pension scheme. From when?
That’s your ‘Staging Date’, and it depends on when you started employing your nanny.
If you are just employing your nanny for the first time now, you won’t have to provide a pension until November 2017.
If you already employ your nanny, you might have to think about it earlier. The specific dates are:
- If you started to employ your nanny between April 2012 and March 2013.... 1 May 2017
- If you started to employ your nanny between April 2013 and March 2014.... 1 July 2017
- If you started to employ your nanny between April 2014 and March 2015.... 1 August 2017
- If you started to employ your nanny between April 2015 and December 2015.... 1 October 2017
- If you started to employ your nanny between January 2016 and September 2016.... 1 November 2017
- If you started to employ your nanny between October 2016 and June 2017 .... 1 January 2018
- If you started to employ your nanny between July 2017 and September 2017.... 1 February 2018
The Pension Regulator writes to employers informing them of their particular date.
How much is it going to cost to provide my nanny with a pension?
Until April 2018, the minimum employer contribution will be 1% of gross salary above £5824. So if your nanny earns £30,000 per year, the employer contribution would be 1% x (£30,000 - £5824) = £242. The employee would make a similar level of contribution.
After April 2018, the employer contributions are going to increase to 2% and after April 2019, to 3%.
If you use a specialist nanny pension service to take care of all the administration for you, this will cost you an additional £60-70 per year.
What do I need to do to sort out the pension?
When you begin employing a nanny, the Pensions Regulator will send you a letter informing you of the date by which you need to offer a pension (your ‘Staging Date’), and asking you to nominate contacts to receive further information from them.
Keep this letter, as it has an important reference number you’ll need later.
You can arrange the pension yourself, or you can pay around £60-70 for a specialist service to do all the admin for you. Koru Kids can help you arrange the latter as part of our service; if you’d like to do this, let us know.
Yes, but only after they’ve been automatically enrolled. You’re not allowed to offer any ‘inducement’ to your nanny, nor to give an opt out form. If you’re found to be offering any inducement or other form of undue pressure, you’re liable for substantial penalties.
Can my nanny opt out?
What if my nanny earns less than £5824?
£5824 is the threshold for the scheme being compulsory.
If your nanny earns less than this, you don’t need to set up a scheme, unless the nanny requests it. However, you do still need to give some official correspondence to the nanny, and the Pensions Regulator.
Which pension provider do you use?
We use NEST (National Employment Savings Trust) [LINK http://www.nestpensions.org.uk/], which is the government scheme for small employers. Over a third of all UK businesses who’ve set up a workplace pension have done so via NEST.
What if my nanny isn't working for me at my Staging Date?
In that case you won’t need to provide a pension. But – as the Pension Regulator doesn’t know that – you’ll still get the letter.
What happens if I don’t offer my nanny a pension when I’m meant to?
You'll be liable for penalties, sorry. There’s an initial fine of £400 for failure to comply with statutory notices, which can be followed by £50 per day if you don’t remedy the situation.