There’s been a lot of buzz in the news lately about new pension rules for nannies that are coming in on June 1. Here’s a quick FAQ!
Is it coming in for everyone on June 1?
No. When it comes in for you will depend on your staging date. You can find that out by entering your PAYE reference on the Pensions Regulator website. Nannies can find a PAYE reference on their P60.
Who pays into the pension?
Both nanny and employer pay into the pension. The initial contribution is 0.8% of the nanny’s gross wage deducted from their salary and 1% of the gross wage paid by the employer. The Government contribute 0.2%. These figures then go up to 2% for the nanny, 2.4% for the employer and 0.6% for the Governmment in 2017 and 3% for the nanny, 4% for the employer and 1% for the Government in 2018.
Is everyone eligible?
Anyone aged between 22 and 65, and earning over £10,000 per year will be automatically enrolled. Nannies can opt-out but employers cannot request that they do or pressure them to do so.
My nanny already has a personal pension. Does she need this?
That’s a decision for nannies to make individually. Your nanny may opt for a work based pension in addition to her personal pension because she does not benefit from additional contributions to her personal pension. She can hold both a work based and a personal pension.
How is this different from National Insurance?
Although National Insurance does in part go towards paying a state pension the work based pension plan encourages additional saving towards retirement to complement the basic national pension.
My nanny doesn’t earn £10,000 a year in my job. Do I need to do this?
If your nanny requests to join a pension scheme you must have a scheme available.
How do I choose a scheme?
There are many different pension providers out there and it is worth doing some research. A good benchmark is the Government scheme NEST which has been set up for employers who need to auto-enroll their employees.