Feb 2017
2
Nannies & Carers - How does Auto Enrolment affect me?
Auto Enrolment means that all employers must put certain staff into a workplace pension and pay into it. Employing someone in your home (such as a carer, nanny, or gardener) means that you are an employer and therefore you will have auto enrolment duties to complete. Your staging date is the date the law comes into effect for you. The Pensions Regulator will write to you to notify you of your staging date and tell you what duties need to be completed.
At staging, you must assess the age and earnings of your staff to see if they are an eligible jobholder. Eligible jobholders are those who are aged between 22 and state pension age and earn over £10,000 per year. You must automatically enrol these employees into a workplace pension scheme.
Auto Enrolment Tasks
- Your first step as an employer is to set up a pension scheme and this can be done in advance of your staging date. When you reach your staging date, you must assess staff, and if eligible, enrol them into the pension scheme. Along with being enrolled into the pension scheme, you must also deduct contributions from employees pay and add these contributions to the employees pension pot. By law, the employer must also contribute to the scheme. These contributions must meet minimum regulations, which is currently 1% employer and 1% employee. By April 2019, these minimum rates will rise to 3% employer and 5% employee.
- If an enrolled employee does not wish to be part of the pension scheme, they can decide to opt out of the pension scheme within 1 month of being enrolled. Employees who opt out are entitled to a full refund of any pension contributions made to date. All employees who are not eligible to be automatically enrolled are known as either non-eligible jobholders or entitled workers. Non-eligible jobholders may choose to opt in to the pension scheme, and if so, they must be enrolled and treated exactly the same as an eligible jobholder, i.e. must meet minimum employer and employee contributions. On the other hand, entitled workers may choose the join a scheme and this scheme does not have to meet these requirements.
- Along with the above duties, you must also communicate with all employees. You must write a letter to eligible jobholders to let them know that they have been enrolled into a pension, the contribution rates and their option to opt out. A letter must also be sent to non-eligible and entitled workers to let them know of their right to opt in or join the scheme.
- Another important auto enrolment task is to complete your declaration of compliance. This must be completed within 5 months after your staging date and notifies the Pensions Regulator that you have fully complied with AE. This must be completed regardless of whether or not you have automatically enrolled employees. If you have no eligible jobholders, be aware that you still have a number of auto enrolment responsibilities, including communicating with non eligible and entitled workers and completing the declaration of compliance. There are many other auto enrolment tasks that employers are responsible for, including keeping records for a minimum of 6 years and re-enrolling employees into a pension scheme every 3 years.
Software Solutions
Although software is not a legal requirement for auto enrolment, the Pensions Regulator recommends that you have software in place to simplify the process. Most payroll software enables employers to automate and simplify the employers auto enrolment tasks. It is important that HMRC Basic PAYE Tools users are aware that the software does not and will not cater for auto enrolment. This means that all the auto enrolment tasks must be completed manually, increasing the workload and the risk of errors.
If you have someone who manages your payroll or finances for you, it may be worth contacting them to see how they can help you with your duties. If you manage your own payroll, BrightPay is the perfect tool that will allow you to seamlessly and effortlessly process auto enrolment tasks. BrightPay automates most of an employers auto enrolment tasks, including employee assessment, auto enrolment communications and opt outs & refunds. The software is currently compatible with 17 different pension providers, including direct integration with both NEST and Smart Pension.
BrightPay’s standard employer licence for 2017/18 costs £99 + VAT per tax year. The 17/18 bureau licence is £229 + VAT per tax year. This includes full auto enrolment functionality, free support, and the ability to process payroll for an unlimited number of employees. BrightPay also has a free licence for employers with 3 or less employees. Book a demo today to see how easy it can be to process auto enrolment with BrightPay. The online demo lasts approx 30 minutes and will also include how you can easily process payroll on a day to day basis for employees. In the meantime, why not download a 60 day free trial to find out how your business can benefit from BrightPay.
