In 2012, the Government introduced the Pensions Act. This Act means that every UK employer must provide eligible staff with a workplace pension and contribute towards it. Employers must also automatically enrol qualifying workers into the scheme by the Staging Date assigned to them by the Pensions Regulator.
This legislation applies to all employers, including Nanny Employers.
What does that mean for me if I’m a Nanny?
That means that, if you qualify, you will be enrolled into a pension scheme. If this is the case, your employer will have to send you a letter telling you that you've been enrolled. If you haven't been enrolled, you'll still get a letter that will explain why.
To meet the criteria for automatic enrolment, you must be:
What if I don’t automatically qualify; can I opt in?
If you do not meet the criteria to automatically qualify, you can still opt in if you are aged between 16 and 75. However, your employer does not have to contribute if you earn less than the Lower Earnings Limit, which is currently £5,824 per year (i.e. £112 per week or £486 per month).
What if I qualify to be automatically enrolled; can I opt out?
If you have been automatically enrolled, you can choose to opt out. However, you need to do this within the first month in order to receive a refund of any contributions made.
It’s important to note that no pressure can be put upon you from your employer to opt out!
How much will be contributed to my pension?
At present, the total amount of minimum contributions towards pensions is 2%. However, from 1st October 2016, this will increase to 5%. This will then increase to 8% from 6th April 2018 onwards.
Here is a helpful table to breakdown how those percentages are/will be made up:
Earnings basis for contributions
In order to receive any employer contributions towards your pension, you need to be earning between the Lower Earnings Limit (£5,824 per annum) and the Upper Earnings Limit (£43,000 per annum).
Opting in and employer contributions:
If I decide to go ahead with a pension, can I transfer it (e.g. if I’m moving back to my home country)?
We asked our friends at Nanny Tax about this one, as it will be a common situation our KiwiOz Nannies will face.
The basic answer is yes; you can transfer your pension—so long as you have a pension set up in your own home country (e.g. KiwiSaver in NZ) that you can transfer it to.
What if I want to withdraw my pension rather than transfer it?
Unfortunately, it’s not that straight-forward/easy to withdraw your pension.
If you need to withdraw due to bankruptcy, you can negotiate with your pension provider to withdraw some of your contributions—however, they would likely charge a fee for this.
If you need to withdraw your pension for other reasons, then pension providers will answer requests on a case-by-case basis. Our friends at Nanny Tax said that pension providers probably would allow it if there were good reason for the request, but providers are not obliged to comply and may well charge a hefty fee. On the other hand, some pension providers may have stricter rules and may not allow withdrawals at all. This could be something to bear in mind when choosing a pension provider.
My Nanny is part-time; will I have to set up a pension for her?
Yes – even though your nanny might not need to be enrolled she has the legal right to join a pension. That means that you need to have a pension in place for her to join.
What if my Nanny doesn’t want a pension; do I still have to enrol her?
If your Nanny qualifies for automatic enrolment, you are legally obliged to enrol her. However, your nanny can always opt out of the pension scheme once they’ve been enrolled if they don’t want to take part.
When will automatic enrolment affect Nanny Employers?
Automatic enrolment is being introduced gradually. The day the new legislation applies to you is called your ‘Staging Date’. Your Staging Date is decided by the last two characters in your PAYE reference.
I’m a Nanny Employer and have received an Automatic Enrolment Letter; what does this mean?
If you’ve received an Automatic Enrolment Letter, it means that it is now less than 12 months until your Staging Date—which is the date from which you’ll have to provide a workplace pension scheme for your Nanny.
You may have also been sent a letter asking you to nominate a point of contact for automatic enrolment—also known as your AE Contact. This is the person that the Pensions Regulator will contact regarding all of your nanny workplace pension obligations.
From there, the next step will be to choose a workplace pension scheme, and then check whether your Nanny qualifies for a pension. If she does, then you’ll need to:
The short answer is no; it is actually illegal for you to ask potential employees whether or not they plan to opt in or out. A good comparison here is if you were to ask a potential employee whether or not they plan to get pregnant in the next year or so!
If you have any further questions about workplace pensions for your Nanny, or if you’re a Nanny and want to find out more—please don’t hesitate to get in touch with your KiwiOz Consultant, as they’d be happy to help!
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