Whilst you might not think of yourself as an employer, if you have a carer, gardener, nanny or cleaner, you may find yourself classed as that under government pension rules. As part of the government’s auto-enrolment scheme designed to encourage pension saving, almost every worker in the country must have a pension fund set up and paid into by their employer.
So, if you pay a nanny or cleaner directly, you’ll be expected to provide for their pension. However, if you employ staff from an agency, then it’s the agency’s responsibility to make pension provision for them. If you drop your children off with a childminder, these rules normally don’t apply, as most childminders are self-employed, as are many gardeners.
Figures released by the Department for Work and Pensions show that there are still 400,000 employers that haven’t yet registered their staff. Failure to do so could result in a fine.
Employees aged between 22 and state pension age who earn more than £10,000 a year (or £833 a month, or £192 a week) must be automatically given a workplace pension.
If you employ someone who earns more than £5,876 a year, or someone who is older or younger than the age range, they have the right to ‘opt in’ to a workplace pension and receive employer contributions. Anyone earning less than £5,876 a year can still choose to opt-in to a workplace pension, but employers don’t have to contribute to their pension.
If you employ someone who qualifies for auto-enrolment, you need to find them a pension provider, enrol them and then make regular contributions to the scheme. The current total minimum contribution of 2% will increase on 6 April 2018, to 5%, and on 6 April 2019, reaching a total minimum amount of 8%.
The Financial Conduct Authority does not regulate some forms of Auto Enrolment.