Know your workplace pension obligations if you employ home help
Do you pay a nanny, carer, or cleaner to help run your household? If so, you may be classed as an employer and under Government auto enrolment rules, you may be required to provide your domestic workers with a pension.
Even if you don’t think your home help meets the eligibility requirements to be auto enrolled into a workplace pension, you must still formally assess whether this is the case, and there is some information you must legally submit to The Pensions Regulator, so don’t stop reading just yet…
How will I know if I must auto enrol my home help into a workplace pension?
If your worker meets the following criteria then you are required by law to set up a workplace pension for them. They must be:
- over the age of 22 and below State Pension age
- earns more than £10,000 per year with you as their main employer
How will I know if someone isn’t eligible for auto enrolment?
If your employee meets the following criteria you do not have to auto enrol them:
- aged below 22 years of age or over State Pension Age
- earns over £5,876 but less than £10,000
But, your workers are entitled to ask to be placed into a workplace pension and if they do, you are required by law to set-up one up for them, which will need both the employer and worker to contribute monthly payments into it.
If someone is self-employed and does not earn the majority of their income from you alone – such as a gardener or window-cleaner – then you do not need to do anything.
Can a worker opt out of auto enrolment?
Yes, those eligible workers who have been enrolled into your workplace pension scheme will have the option to give their ‘opt out notice’ in the ‘opt out period’. This is one calendar month from the date of enrolment and workers who have opted out during this period can get a full refund on their pension contributions. Workers can’t opt out before they have been enrolled into a workplace pension scheme.
When do I have to start paying workplace pension contributions?
The date that you will need to start paying pension contributions would be the moment when your staging date comes into effect. The staging date is individual, and this is the date that legislation applies to you. Here is a handy online staging date checker tool that enables you to check which duties apply to you and when. You’ll need the last two characters in your PAYE reference number.
What pension contribution do I have to make as the employer?
Until April 2018, the minimum contribution an employer must make has been set at 1% of your employee’s ‘qualifying earnings’. This will rise to 2% in 2018 and 3% in 2019.
You can work out ‘qualifying earnings’ as either:
- the amount an employee earns before tax between £5,876 and £45,000 a year
- their entire basic salary or wages before tax, subject to certain conditions
For further advice, read our Introduction to Auto Enrolment Contributions
You mentioned I may still have obligations even if none of my domestic workers are eligible for auto enrolment?
Yes, as an employer you still need to prove you have carried out an assessment of your worker to establish that they aren’t eligible. You must also fill out a Declaration of Compliance and submit this online to TPR.
You can use TPR’s online Duty Checker tool to find out what you need to do and by when.
How do I set up a workplace pension scheme?
TPR has a checklist of things to consider when choosing a pensions provider, and here at NOW: Pensions we are a master trust with Master Trust Assurance Framework (MAF). We offer a low-cost, simple way to provide a workplace pension scheme for your workers with easy online sign-up so you can be clear and assured that your workers will benefit from a quality pension.
We are always happy to provide advice or assistance about how to meet your workplace pension responsibilities. Contact the NOW: Pensions Client Support team on – 0330 10 03 336.