Families with nannies and the elderly who take on carers must start paying into a pension in as little as five days’ time — or face a £400 fine. An overhaul to the pension rules will see more than 700,000 small employers start paying into a pension for their workers for the first time. In some cases, they must comply with the rules from next Monday. Those affected include firms with only a handful of staff, but also working families with nannies and cleaners, as well as the sick and disabled who rely on carers. Over the past two years, watchdog the Pensions Regulator has sent out a flurry of warning letters about the changes. But there are still fears that many aren’t ready, won’t understand their responsibilities or will try to avoid them.

WHAT’S HAPPENING?

Since 2012, the Government has been ordering companies to enlist millions of workers into pensions for the first time.The aim of the shake-up, known as auto-enrolment, is to make sure people have some kind of private pension in their retirement. This will hopefully reduce the burden on the state purse over the coming decades. So far, five million people have been signed up. The largest firms were ordered to set up schemes for their workers in 2012, followed by medium-sized businesses. Now firms of between one and 30 staff must sign up all workers over the age of 22 who earn £10,000 or more. This includes small family businesses, such as convenience stores, hairdressers or local hardware shops. But it also includes those employing nannies and carers who would never have classed themselves as businesses. The precise date for each of the 700,000 businesses to comply depends on the PAYE number you are allocated by the taxman, through which you pay the nanny’s or carer’s pension. The earliest date to comply is from next Monday and the latest is October 2017. Already, thousands have been told to set up their scheme. If you’ve ignored letters from the Pensions Regulator, you could be in line for a hefty fine. The first letters arrive about 18 months before your start date, so if you haven’t heard anything you’re likely to be one of the later ones. You can check your staging date by getting your PAYE reference from HMRC and then checking with the regulator. If you took on a nanny or carer after April 1, 2012, you’ve been classed as a new employer and are at the back of the queue. You will have to pay a pension only from 2017.

WILL ALL NANNIES AND CARERS BE ELIGIBLE?

If your nanny or carer is aged between 22 and state pension age, and earns more than £10,000 a year with you as their main employer, you must set up a pension and start to pay into it. This is also the case if you share a nanny or carer with another household — you’ll share responsibility. If they are under 22 or earn more than £5,824 but under £10,000, it’s not obligatory. However, they are entitled to ask you to set up and pay into a pension for them — and if they do, you must arrange it. If you have a carer with your help funded by the local council, you may still have to pay. This is likely to affect the estimated 100,000 sick and elderly people who receive money from their local authority to pay for their care through a method known as direct payments..........Read more here