Offering Nanny Pension

[meggleshs]

I don't have to offer our nanny a pension until August 2017. However, my nanny & I were talking about how she really should have a pension, etc.

Got me thinking. She's been with us for 7 months, is working out brilliantly, better than expected. Could I / Should I offer her a pension at our 1 year anniversary? ie - in lieu of a pay rise? (but would pay her a bonus as a 'thank you').

I don't know if this is easily possible using paye for nannies (our current payroll folks), and will call them in the morning to ask.

But wanted to know the legality / thoughts on this.

Bonus is taxable, pension contribution is treated a bit differently. I do not have a full understanding of it but I think there is a Employers NI saving to be made and also an employee NI saving, as the deduction is made before calculating NI. Chat to your payroll provider.

Could you administer the pension scheme yourself, or would you need the payroll company to do it for you, if so at what cost?

What if the employee had their own pension and you offered to pay in to it, wonder how that would work? Less admin than running your own scheme possibly, though you will need to provide a scheme in August 2017 regardless of if the employee has their own pension or not.

What is the minimum that the scheme would accept each month? Can you easily freeze payments, for example if your employee stops working for you. What if they go on long term sick, do you still need to provide the pension contributions?

Many things to look at but I think it is great that you are considering offering your nanny a pension scheme before you legally have to do so.

Hi Meggleshs

You don't need to wait until your staging date to set up the pension for your Nanny, you can do it now if you like.

There's lots of useful info on the Pensions Regulator site for Employers regarding the Auto Enrolment side of things:
www.thepensionsregulator.gov.uk/

There's also a quick guide to choosing a suitable pension scheme:
www.thepensionsregulator.gov.uk/docs/employer-select-pension-automatic-enrolment.pdf

Hope that's useful. :-)

Thanks - I rang nannypaye (our payroll provider) who were really helpful. I've offered my nanny a NEST pension, as part of her package starting next year. She's thinking about it and will let me know in a few weeks.