Any family which employs a nanny or other private household worker will now need to contribute to their pensions, as the latest phase of the automatic enrolment rules come into effect.
The pensions shake-up – the first stage of which was introduced by the government back in 2012 – was always intended to bring even the country’s smallest employers into the contributions fold, but so-called ‘micro-employers’ will now have no choice but to get their paperwork in order as soon as possible.
As of the start of October 2017, anyone who employs a nanny, cleaner or other domestic staff member (including carers) must contribute the equivalent of a minimum of 1% of their monthly salary towards their employees’ pension pot, provided the worker is 22 years old or over, earns at least £10,000 per year and is not already enrolled in another workplace scheme.
Rupert Jones, writing in the Guardian, notes that – despite the long-established timetable for the rule changes – it is possible that some families may still be taken by surprise because “of course, many of the smallest employers don’t think of themselves as such – they are individuals who just happen to have someone who works for them”.
Further contribution rises on the horizon
Fortunately, help is at hand in the form of the Pensions Regulator, which has an informative help section designed to teach people who are employing workers for the first time all they need to know about their contributions arrangements.
Something else which is important to bear in mind is that employers’ monthly contributions will not remain static indefinitely, even if their employees pay does not change from year to year. Contribution rates are pencilled in for the start of the next two financial years (April 2018 and 2019), which will typically raise employer contributions to 2% and 3% of the employee’s salary respectively.
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