Pensions for Nannies - what do you think?

[ClaireZest]

I posted a question to Rachel Reeves regarding Labour's proposals for workplace pensions for nannies. It's something I'm starting to come across more and more and I can see it becoming a real problem (ie higher costs and extra administration for the employers and less take home pay for the nannies).

Here's my question and how she answered:

ClaireZest:
"Could you please tell us what workplace pension provision Labour will propose for nannies and their employers?
I work closely with parents who employ nannies and a lot of them are concerned that employment costs will rise dramatically if the Automatic Enrolment workplace pensions regulations will continue to apply should we see a change in government."

Rachel Reeves:
"I think it is right that people who are working get access to workplace pensions and that people who employ people contribute to that. We legislated for it when we were previously in Government and it is being rolled out at the moment. By 2017 if you employ a nanny then you will pay towards their pension (the contribution is about 3% of their salary above the NI threshold). They will also pay in and they will get some tax relief as well."

I just wondered what the parents employing a nanny and the nannies among you think about this?

If you are considering employing a nanny for the first time, would you be put off with then having to set up a pension scheme for her/him too?

You can't pay into an existing pension as it has to be a compliant one. At my workplace we've had pensions where the employer contributes for years but they had to be chsnges to a different scheme last year to meet auto enrolment regulations.

Dh who teaches in a private school had no pay rise last year because of auto enrolment costs.

Employers can't opt out. Workers can opt out.

Employers can't suggest anyone opts out or even facilitate a worker opting out of the scheme. That is inducement and the employer could be fined if The Pensions Regulator were notified.

Employers can pay into an existing scheme as long as the scheme is a Qualifying Workplace Pension Scheme (QWPS) and there is a QWPS agreement in place. Existing pensions can potentially be made a QWPS.

Thanks. That's helpful. In fact she is now 60 - she was 57 when she started - so she really doesn't want to start a new pension now. This whole thing is a bureaucratic mare...