Whilst you might not think of yourself as an employer, under the government’s auto-enrolment pension legislation, the Pensions Regulator may think differently. If you employ a nanny, a cleaner, or a personal care assistant, then you could be classified as an employer and need to set up a workplace pension.
If you pay staff directly, you’ll be expected to provide for their pension. However, this doesn’t include staff you employ through an agency, as it’s the agency’s responsibility to make pension provision for them. If you take your children to a childminder, these rules normally don’t apply, as most childminders are self-employed, as are many gardeners.
Who has to have a pension? 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 make a contribution to their pension.
If you employ someone who qualifies for auto-enrolment, you will need to set up a pension and make regular contributions on their behalf. The current total minimum contribution of 2% of qualifying earnings will increase on 6 April 2018, to 5%, and on 6 April 2019, reaching a total minimum amount of 8% including the tax relief on your employees’ then 4% contribution. We can advise on the right scheme for your needs and help you complete the documentation required by the Pensions Regulator.
The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.