Nannies attitudes to new pension scheme

[chocchipbrioche]

Hi there,
I'm a nanny and to me this future boss pays into nannies pension scheme seems completely unfair on behalf of my future employers. We all know hiring a nanny is an expensive business ( but we're worth it ) but it's something parents have to decide to pay out for if they want that level of care. On top of my salary my boss has to pay all my tax and national insurance and now to say they need to pay into my pension too makes me think that it's going to be harder to find a job at a reasonable hourly/weekly rate as parents now have this added expense. I work in North London and as I'm a career nanny with 20 years experience my hourly salary is £12 an hour. In the interviews I went for before landing my current job I had to stick to my guns for that amount (as I have bills to pay too) and interviewing parents wanted to drop down to £10 or even £9 an hour.
Over the years I've found it harder to walk into a new job despite having the full package of qualifications, experience, refs, first aid blah blah blah, as there is competition from foreign girls willing to work for less money and also other career nannies who are in a position to work for less money as they have a husband or partner who has an income too.
It's fine for big companies to pay into peoples pensions as there is a lot of money floating around and it's not personal. To have it come out of a working mother and fathers income seems ridiculous to me and quite frankly I don't know how it's going to be doable for most families.
I personally wouldn't want to miss out on a great job by being greedy and expecting parents to pay into my pension. I have my own one that I pay into each month and wont be asking for it in any future interviews with parents. I would much prefer to know that I'm getting a fair weekly wage plus having the money left in the kitty each week to take the kids out to nice places and treats and not leave my bosses worrying about their bills as they are being stretched too thin.
What do other nannies out there think about this ? I'd love to hear some other opinions.

You pay your tax. Your employer doesn't. Apart from that, I understand your points.

I understand what you're saying, however this:

On top of my salary my boss has to pay all my tax and national insurance

to me, is one of the major bugbears of being a nanny. I agree gross wages, I assume that my employers are intelligent people who have a good grip on their finances and would never offer me more than they could afford. This being the case, I don't feel guilty that tax and National Insurance are taken from my salary every month because this is the way of things in every other non-nanny job I've ever had.

That's off topic though, I don't have a private pension that I pay into (I really should), and I anticipate that this additional obligation to pay into a pension for your nanny will put some employers off having one. Who knows how it'll play out.

If it bothers you that much you can opt out of the pension.

Saying at interview that you won't be taking up the pension will help you get future jobs. It's like maternity law. A prospective employer can't ask - but there's nothing to stop an interviewee revealing that they have completed their family and won't be needing maternity provision in their contract.

But surely you agree a gross salary, on which your employer pays tax and NI? I presume the £12ph is what you expect to receive after deductions.

The fact that you have your own pension arrangements should make you attractive to employers as you can then opt out of the gov scheme.

It will increase the cost to employers a bit. Employer contribution starts at 1% and goes up over time to 3%. Those percentages may change over the years but I don't see it going up hugely - more likely that the Employee contribution would increase.

This will be yet another nail in the coffin of Net Pay Agreements - so I see it being a good thing.

When calculating the cost of childcare, parents need to look at everything that they would be paying out. In the same way, other childcare providers will also be having these cost increases, a nursery for example will need to do a pension for all it's staff (subject to eligibility). Maybe we will see nurseries stopping employing anyone over age 21 but I expect ages of staff in nurseries will remain much as it is now... many young but some older.

Nanny salaries may take a bit of a hit initially but as nannies I feel we should see it as being an investment in our future. We should all now be paying into a pension scheme - some of us do but many probably do not. Those who really object to having a pension can opt out but it has to be their own choice, not encouraged by an employer.

It's not just pensions, but all the other responsibilities a nanny employer has that completely puts me off employing a nanny (currently CM + pre-school, previously nursery).

I know you tend to get more from a nanny as nanny duties can technically include non-childcare elements such as tidying child's room, washing clothes etc, but all the extra admin and legal responsibilities puts me off.
Most parents just want someone to look after their DC in their own home, they are not running a business for a profit or a charity that has a source of income. To me it's completely unfair to expect parents to act as employers when they are not present for most of the time at the nanny's place of work (ie their home).

With some of the threads on here of parents having to deal with maternity leave, redundancy, employment tribunals etc. it's no wonder you might find it harder to get work. Adding pensions into the mix is just another thing where parents feel it's just too much effort to get a nanny.

Personally, I think the law should be changed so that nannies can work as self-employed professionals (rather than employed domestics). The most enterprising ones would help to revolutionise "flexible childcare" and would earn more in the process.

I do believe that people should have pensions, but other self-employed professionals seem to manage this without too much hassle. Becoming a business would mean that you would be able to offset the costs of business tools (eg a car, petrol, insurance) against your revenue (for tax purposes) if you were to provide a car driving service to your client's DCs for example.

I'm also really worried that this will put off even more families meaning less nanny jobs available!

Though as others have said- there's nothing stopping you pointing out at interview that you have your own pension and don't want another.

cjm has it really. We could technically afford a nanny, but we just go for au pairs instead and just overpay them and give heaps of extras; expenses, gym membership, Merlin pass, include in weekends away, cash bonuses etc because worrying about tax, national insurance, liability, mat leave and now pensions would just not make it worth it to me. I'm self employed as it is so I'm constantly busy with that. I haven't the time for an extra weight to my load.

We had nannies for many years but have now moved to having au pairs and I will never go back to having a nanny - being treated in the same way as a business is simply impossible, at the very least it should be possible to pay nannies from pre-tax salary (as a companies effectively do with their employees ie reduce their tax liability).

We would have definitely considered a nanny share but put off by all the red tape and responsibilities of having an employee

It will just mean more people take the risk of paying cash in hand. Different for experienced and sought after nannies who can dictate their terms but entry level will feel the squeeze. I've employed a few mother's helps and they never, ever have a P45...

What is the most scary bit for employers, the admin, the money or both?

Admin - I imagine payroll companies will sort much of that out for you, for a fee. A fee I have seen mentioned is £60 a year, so £5 a month.

Money - doing some rough calculations, if nanny is paid £1700 a month gross, then Employer contributions are around £12 a month initially, rising to £24, then to £36. There will be some pennies but those are the rough figures.

Nannies contributions will start a bit lower (under £10 in this example) but increase higher.

So the pension contributions are not huge but they will have an impact. Is it really going to be significant enough to put parents off having a nanny?

The tax-free childcare scheme will help a bit once that kicks in, though max limits on that will apply.

Nannynick I don't think this change is a deal breaker it's just another hassle that over time makes people like me realise that it is crazy to have all the hassle of having all the responsibilities (and costs) of being an employer but without being able to offset any of it against tax (as any company would be able to do). So deciding to find other solutions - ie as WonderingWillow says, an au pair with masses of extras thrown at her.

Yes, it's the incremental creep of additional stuff to keep track of. Particularly when you are treated as an employer for some situations and not in others (I am thinking specifically of the £2k employer NI rebate which nanny employers are not entitled to )

It probably won't change my mind about employing a nanny but even with a nanny tax company, I spend a fair bit of time working everything out, scheduling payments, explaining how it all works to my nanny. etc. It is time consuming and I spend more time doing it than I do looking after my own finances. Which isn't exactly a good thing but I run out of time and energy.

I can't afford a nanny, but I do believe that all employees, including nannies, deserve a good pension. In my opinion, nannies are the gold standard of childcare (I can't afford one, but would have one in an instant if I could), and a nanny is never going to be something that every family can afford. For the long hours, flexibility and 1:1 childcare they provide, they deserve to be paid well, including a pension. There is a ticking timebomb in the UK regarding the number of people without pensions, and I think its a good thing that the government is trying to sort it out.

I'm a GP, with 10 years experience. After paying my nanny I am earning £6.92 per hour. Am seriously considering giving up work, the pension may be the final straw.

Electionfatigue, do YOU have a pension, contributed to by your employer?? And, do you like the fact that this gives security for your old age? If so, then why shouldn't your nanny have the same? She is a human being who will grow old, just like you. Also, why would it make you give up work?? Plenty of us work and use other forms of childcare. I would love a nanny but can't afford one, so I use a childminder. Others use nanny shares or nurseries. Not working because you can't afford a nanny is like saying that you can't afford a round the world cruise so you're not going to go on holiday at all!

I'd like the governments on are up the their minds whether we are employers or not. At the moment, we get all the downsides of the latest changes (no reimbursement of SSP, pension contributions to pay) yet are excluded from the small business NI exemption. How is that fair? And if you knows childminders that will accommodate the days when I start seeing patients at 7.30am, I'd love to be introduced to them.

And yes, I do pay into a pension, the NHS one. Recent changes to it, over which I have no control, will cost me a six figure sum over my working life with a reduced benefit at the end of it.

Sorry first line should say government to make up their minds. Damn phone!

Electionfatigue, I understand your frustration about your pension - I'm a member of the teachers pension scheme, and mine has been changed in a similar way. However, I don't think you're being fair on nannies. Nannies are the people who your child spends most of their waking hours with (not a dig at working mums - as I work too, and the same could be said of my childminder). Surely that person then deserves security in their old age? If you can't afford the fuel, then you can't afford the private jet. If you can't afford the vet bills, you can't afford the pony. If you can't afford to pay a decent wage, along with sick pay and pension contributions, then you can't afford the nanny. Get a childminder or a nanny share instead, and just accept that not everyone can afford the most expensive choices. Surely as a GP, you work the sort of hours that would fit in with a childminder or nursery? We all want the best in our lives, including the best childcare, but we have to accept that not everyone can afford the best and move on rather than moaning.

I'm not moaning. What I object to is that nanny employers seem to have the worst of all worlds.

No other business pays their employees out of already taxed income. If we are a business, then the nanny's tax should be tax deductible from my income, and we should get the NI exemption. If we're not a business then we shouldn't have so much paperwork and risk for SSP etc.

GP's work pretty antisocial hours, I leave the house before 7 some days and am often not back until 8 - don't believe the Daily Mail spin that we all get £250k for working 9-5!

I would add that I know more and more doctors who are giving up work because they can't afford childcare. Doctors tend to marry other doctors - if both of you have long unpredictable hours then a nanny is often the only option. I'm not asking for special treatment, but the government does need to consider whether it is efficient to spend money training us, only for the NHS to lose all that knowledge when a few tax breaks on employing a nanny would give equity with other businesses and keep people in work.