Most of the content on this site became out of date on 01 February 2018 with the ending of statutory staging dates. Enquiries from employers requiring a new auto-enrolment solution for their workplace pension, after this date, should click through to the Lighthouse Pensions Trust, the “sister” scheme to Trust Pensions within the overall Corporate Pensions Trust master trust “umbrella”, as listed by the Pensions Regulator.
If you have already registered with HMRC as an employer and want to find out by what date you need to comply with the new regulations and when your staging date will be, please go to The Pensions Regulator website and key in your PAYE reference number. You may have received a letter from The Pensions Regulator explaining when your staging date is and what you need to do next. Our 10 step guide can help you from this point.
You will have six weeks from your staging date in which to register your employee, provided that they qualify as an ‘eligible jobholder’, with a qualifying scheme and start paying contributions. If you have a payroll provider, they can help set this up for you using TRUST|Pensions® as qualifying workplace scheme.
If you have employed a nanny or carer through an agency and you pay the agency who in turn pays from the agency’s payroll, then the nanny or carer is being employed by the agency, not you, and it is the agency’s responsibility to enrol them into an auto-enrolment pension scheme.
If you assess your employee and they are a ‘non-eligible jobholder’ or an ‘entitled worker’ you are not obliged to set up a scheme to automatically enrol them. However, if they then ask to be enrolled into a scheme you must then set one up and enrol them.
Obligations under the Pension Act 2008 apply whether the employee is temporary or permanent as long as they qualify as an eligible worker, however, anyone employed for less than three months will not need to be enrolled by their employer automatically as you can postpone a new employee from enrolment for up to three months.
Pension contributions will be based on your employee’s gross salary earnings, including overtime and bonuses within the qualifying earnings band, so it is important to agree a gross salary with your employee before they start work. A payroll provider can help you with this.
Employer and employee contributions
Contributions are due to gradually increase over the next few years.
|Up to 30th September 2017||1.0%||1.0%||2.0%|
|1st October 2017 – 30th September 2018||2.0%||3.0%||5.0%|
|From 1 October 2018||3.0%||5.0%||8.0%|
If your nanny qualifies as an “eligible jobholder”, as their employer, you will be expected to pay a minimum contribution into a pension scheme based on your nanny’s “Qualifying Earnings”.
Qualifying Earnings are currently defined as the amount between an annual gross salary of £5,824 to £42,385 (for tax year 2015 to 2016). You can see a full table here.
EXAMPLE 1: This means that if your nanny is earning £15,000 per year, you calculate the contributions on the amount of £9,176 (£15,000 minus £5,824). The employer contributions (as they gradually increase over time) on top of the full salary will be £91.76 (1%), £183.52 (2%) and £275.28(3%) per annum. Similarly the employee’s contributions made from their gross salary will be £91.76(1%), £275.28(3%) and £458.8 (5%) per annum.
EXAMPLE 2: If your nanny is earning over £42,385 you calculate their earnings as follows:
Your nanny earns £50,000, which is above the Qualifying Earnings cap of £42,385. Therefore the employer pays a pension contribution based on the amount of 42,385 – £5,824 = £36,561. £365.61 (1%), £731.22 (2%) and £1096.83 (3%). Similarly the employee makes their contribution based on their qualifying earnings. In this case, £365.61 (1%), £1096.83 (3%) and £1828.05 (5%) per annum.
Parents can choose whichever qualifying scheme they wish to enrol their employee. It is important to choose a scheme who are free to use, fast to setup, and are guaranteed acceptance - which means they accept employers employing only one person. TRUST|Pensions® has a simple, secure and free sign up and set up service, which you can use or ask your payroll provider to do for. The scheme is a guaranteed acceptance master trust, so welcomes all employers.