Pension time for small business employees – including the nanny

This is the pension wise mascot

Pensions

Jamie Jenkins

2nd February 2016 at 3:54pm

Automatic enrolment has been running for 3 years, with almost 6 million employees now joined into workplace pensions. So far, it’s been a great success, with less than 1 in 10 people choosing to opt out.

Around 1.8m small employers are still to set up a qualifying workplace pension between now and 2018. And there’s still the issue that there’s no provision yet for the 4.5m or so self-employed people in the UK.

Of course, many self-employed people employ others and, as such, they will be classed as employers and need to set up a workplace pension at a date set by regulation.

If you employ one person, you may need to set up a pension

This may be fairly obvious for a small firm employing a handful of people in their trade, but may not be expected for those simply employing a nanny, a carer or even a gardener. As long as they are of a certain age and earning a certain amount, they are eligible for automatic enrolment and their employer will be responsible for making it happen.

If you’re reading this and wondering whether you would be classed as an employer, it’s worth checking, as leaving it too late will certainly cause you problems. The Pensions Regulator has now issued ‘compliance notices’ to almost 5,000 employers and over 1,500 have been handed out fines of £400 or more. Most of these could have been avoided.

What you need to do – and when

So if you are affected, what do you have to do?

Providers have made every effort to ensure that the process is straightforward for employers, and the pensions regulator is trying to simplify things as far as possible, too. However, there is some work to do so the first thing is to ensure you leave plenty of time. We recommend allowing at least 6 months before your ‘staging date’ (the date you need to set up a workplace pension, which you can check online with the Pensions Regulator).

Beyond that, you will need to take the following steps:

  1. Choose a workplace pension provider
  2. Check who you will need to enrol into the pension, if anyone
  3. Work out how much you and your employee/s will need to contribute
  4. Communicate with your employee/s, both before and after enrolment
  5. Pay contributions accurately, and on time.

Where to find out more

Whether you’re a hairdresser, an architect or employ a personal care assistant, if you employ at least one person you are an employer and you may have a legal duty to automatically enrol them into a workplace pension. You can find out more on this, including what you need to do and when, on the Pensions Regulator website.

 

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A personal pension is an investment and its value can go up or down and may be worth less than you paid in. Laws and tax rules may change in the future.

The information in this blog or any response to comments should not be regarded as financial advice and is correct as of January 2016.

Image – ‘Workie’ the Government’s mascot for Workplace Pensions.