Do I need to pay my nanny a workplace pension?
Friday, 27.04.2018 at 04:29PM
If your family employs a professional nanny or housekeeper, you are now considered a micro-employer. If you pay them over a set amount, you will be required to enrol them in a workplace pension scheme.
Five years ago, the UK government launched a shake-up of retirement saving, designed to get more people looking to the future and save for their retirement. Automatic enrolment requires employers to set up pension funds for their employees, with both you and the employee paying money into the fund each month.
Your nanny’s eligibility for auto-enrolment
All nannies aged between 22 and the State Pension Age, who earn over the Personal Allowance (£11,850) must be automatically enrolled into a workplace pension. Nannies who aren’t eligible still have the right to ask for a workplace pension.
Does auto-enrolment apply to part time nannies?
It can do - even if your nanny does not meet the requirements for auto enrolment they have a legal right to join a workplace pension scheme, should they wish.
What if your nanny doesn’t want a pension?
Your legal obligations are to enrol your nanny in a workplace pension scheme if they meet the above criteria, or they ask directly to join. However, your nanny has the ability to opt-out of the scheme if they don’t wish to take part.
The cost of auto-enrolment for nanny employers and nannies
Below you will find the minimum percentage that you, your nanny and the government must contribute into your nanny’s workplace pension:
6th April 2018-5th April 2019
- 2% - Employer contribution
- 2.4% - Nanny contribution
- 0.6% - Government contribution
- TOTAL – 5%
6th April 2019-onwards
- 3% - Employer contribution
- 4% - Nanny contribution
- 1% - Government contribution
- TOTAL – 8%
Note: Your employer contribution is not based on your nanny’s entire salary. It is based on ‘Qualifying Earnings’. This means you only pay a workplace pension contribution on part of their gross salary, reducing the amount you have to pay.
If you want further clarification on your workplace pension obligations, check out the Nannytax calculator which will display your liabilities for salary, income tax, employee and employer NICs and auto-enrolment.
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