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Nanny Employers to contribute 3% towards nannies pension - from Oct 2012 / 2017

(72 Posts)
nannynick Sat 30-Oct-10 12:21:31

I have just heard on MoneyBox that employers of nannies will not be excluded from the upcoming work pension scheme, so employer contribution will be 3%, employee contribution 4% and Government adds 1%.

Good that the BBC asked about nannies... it is something I tweeted to @R4Today when they discussed the work pension scheme, so looks like they took notice and asked the specific question.

It will apply if the employee is aged 22+ and earns £7475+ per year. It starts from Oct 2012, though will be phased in between then and 2017. (info from the link above)

What are your thoughts... will this make much of a difference to nannies salaries? Will it result in more employers of nannies not operating PAYE?

Blondeshavemorefun Sat 30-Oct-10 12:51:33

so does this mean the employer has to pay 3% extra and we lose 4% of our salary each month towards a pension?

i already have a private pension that i contribute to

sorry if blonde, had a late night smile

onimolap Sat 30-Oct-10 12:55:55

The employee can choose to opt out.

But the employer must provide, unless that opt-out is definitely exercised.

nannynick Sat 30-Oct-10 12:58:25

Yes, I think so.
Not sure what will happen if we already have a private pension, as that won't have employer contribution. Maybe there will be some opt-out, which enables the private pension to be continued and the employer contribute towards it.

As ever, details are abit patchy at present.
NEST website has been established but not a lot of info on it yet.

frakkinstein Sat 30-Oct-10 13:09:48

This is on top of the gross salary, correct?

nannynick Sat 30-Oct-10 13:36:04


I would wonder if it will be a deduction, like employee tax/NI.

I do wonder how it will be done... will the employer have to send a separate payment to NEST, or will it all be done via payments to HMRC.

As far as I know, the specifics of how the scheme will work have not been released. Does anyone know if that sort of level of detail is available somewhere?

frakkinstein Sat 30-Oct-10 13:53:34

Well if it isn't on top of the gross salary all I can see is it being yet one more reason to negotiate a gross salary!

sprogger Sat 30-Oct-10 14:08:28

Message withdrawn at poster's request.

nannynick Sat 30-Oct-10 14:19:09

Maybe it will be the final nail in the Net Wage coffin - resulting in all nanny agencies only telling parents and nannies to negotiate salary as Gross.

nannynick Sat 30-Oct-10 14:20:25

Moneybox 30-Oct-2010 iPlayer link

nannynick Sat 30-Oct-10 14:24:21

At around 4 minutes... Steve Webb (Minister of State for Pensions) says that small companies won't need to be in the scheme until towards the end of the phasing in period. So we are looking at 2016/2017 before nanny employers will have to provide the pension scheme.
At 4:58 - nannies are mentioned.

Blondeshavemorefun Sun 31-Oct-10 15:51:01

so nothing likely to happen for years

mranchovy Mon 01-Nov-10 22:04:54

Disscussed briefly here six months ago. It looks like my guess that the new government would bin this and the associated NEST quango may have been a little premature, but there is some time to go yet...

Strix Tue 02-Nov-10 18:20:27

If this happens, it will tip me over the edge and put one nanny out of work. I am having my third DC in mid ecember. Older two are in full time school. I am absolutely not paying for any pension contribution. So, if this happens (and I realise it is a long way off) I will get an au pair and a childminder and avoid the minimum salrary under which this has to be paid.

I think it will definitely result in more people paying cash in hand, or at least part cash-in-hand. People will put their nanny on the books for some £500 per month, call her an au pair and pay the rest in cash. Proper on-the-books Ofsted registered nannies will become a priviledge of the rich.

Treating parents like profitable business is outrageous. If anyone wants to start a protest I will gladly follow.

martinpc63 Sat 31-Aug-13 17:16:36

Ft article today says anyone who employs a nanny will need to go register for pension auto-enrolment and this applies 2015 onwards. Some more info here

Blondeshavemorefun Sat 31-Aug-13 22:40:46

So almost 3yrs on from when I last replied - but is this now happening

On a rough guide of a nanny earning £20k gross the employer will have to pay an extra £620ish a year into a pension - is that right?

NomDeClavier Sun 01-Sep-13 00:24:01

It's definitely happening, and will coincide with the new tax free Childcare scheme being introduced in 2015....

Nanny payroll agencies are probably running their hands in glee.

PowerPants Sun 01-Sep-13 22:58:35

I think this is going to be the end of nannies for anyone except the super rich sad

martinpc63 Mon 02-Sep-13 11:12:49

The Government didn't decide to keep it simple! I am no expert but it looks to me like the minimum contributions are 2% (1% from employer and 1% from nanny) to September 2017 when they increase to 3% nanny and 2% employer and then increase again in October 2018 to 5% nanny, 3% employer (nanny will get tax relief at 20% so this 5% becomes 4%).

At 3% the employer contribution is 3% or £600. But to maintain the net pay of the nanny after tax and deductions, the combined cost from October 2018 is effectively 7% or £1,400 on £20,000 gross earnings.

There are going to be some interesting negotiations!

As an employer, by law you have to enroll the nanny and give (her) the option to "opt out" without pressure. But since it involves "free" money probably most will take it, which is of course the intention of the Government.

martinpc63 Mon 02-Sep-13 11:24:07

Correction: Just read these minimum percentages apply only on what they earn over a minimum (currently £5,668 but will increase each year). For example, for a nanny who earns £20,000 a year, the minimum percentages apply to the difference between £20,000 and £5,668, which is £14,332. Thus the employer would pay £430 and the nanny £573, total £1,003.

nannynick Mon 02-Sep-13 11:26:18

Why would net pay of the nanny be maintained?

Yet another reason employers should agree gross pay.

Is it always going to be a percentage of salary or is there minimum amounts?

nannynick Mon 02-Sep-13 11:29:24

It is something else to build into the cost calculations. Wonder how it will affect other forms of childcare.

Is there a link to the rules for how it works and timescales?

AmandaPandtheNightmareMonsters Mon 02-Sep-13 12:38:05

I am not a pension expert, but the employer contribution will presumably be a direct additional cost to employers, even if they do agree gross pay? This is a percentage on top of gross pay. The employee contribution obviously comes off unless you have a net pay agreement (which naturally you shouldn't).

If you are hiring a new nanny, employers will obviously have to factor this in. Not sure what you can do with an existing nanny though? Employers could find quite a bump in their childcare costs - all I can think you could do if you and the nanny couldn't agree a reduction in gross salary is make the nanny redundant and re-advertise at the lower salary that you can afford (which would potentially be a fair dismissal if done correctly, though it could be a bit borderline).

NoPhoto Mon 02-Sep-13 12:59:20

I'm about to hire my second Nanny and am sailing close to the wind in meeting her salary requirements. So glad to read these posts as this is something I had not budgeted for.

So, Nanny has asked for £10 gross. How would I then factor these pension payments in? I cannot afford any more than £10 ph, specifically when Nanny has expressed an interest in beginning her own family which has meant me having to ensure I could afford accrued holiday pay if on maternity leave. Argh.

nannynick Mon 02-Sep-13 13:42:07

Has any nanny employer (paye scheme started before april 2012) found out the start date for pension scheme? Would be interesting to know when this really starts for very small employers.

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