Auto enrolment pensions – courtesy of Nannytax
In response to the recent article in the press we are keen for our clients to understand the requirements under the new Pension regulations.
In 2012 the UK government introduced the Pensions Act which requires all employers to provide a workplace pension, including families employing domestic staff such as nannies, housekeepers, gardeners, etc; where the salary exceeds £9,440 a year.
The new regulations are being introduced over a period of 6 years starting in 2012 for the largest companies and nobody employing less than 30 employees will start before 2015.
If you already employed someone at 31st March 2012 you will have to join the scheme sometime between 1 June 2015 and 1 April 2017.
If you start to employ after 31st March 2012 the joining dates are as follows:
Start to employ Join the scheme
Between April 2012 and March 2013 1st May 2017
Between April 2103 and March 2014 1st July 2017
The amount put into the employee’s pension pot will be a combination of the employee’s contribution, the employer’s contribution and tax credits from the government. The percentages will be gradually increased until October 2018 as follows:
Dates Employer Employee Total
Start date of joining pension scheme until 1% 1% 2%
30th September 2017
1 Oct 17 to 30 Sep 18 2% 3% 5%
1 Oct 18 onwards 3% 5% 8%
These are the minimum levels of contribution. Therefore based on a gross salary of £25,000 the cost to the employer for the pension provision will be £250 per annum until 1 October 2017 when it will rise to £500 per annum. We would urgently remind potential employers to always agree a gross wage when employing a member of staff. Agreeing a net salary would result in the employer having to pay both the employee’s pension contribution and the employer’s contribution.