AE fine warning for clients with household employees
Clients who may privately employ 1-2 people, such as a nanny or housekeeping staff, need to be brought up to speed on auto enrolment, warns Steve Moy of St. James’s Place
Clients who employ a nanny or housekeeper are among those who risk being fined £500 a day if they have not enrolled that employee in a pension scheme before the auto enrolment deadline set by the Pensions Regulator.
Government advertising has been effective at letting employees know about the process, but we believe that more needs to be done to educate employers, particularly those employing just one or two people. There is a real danger of many people leaving it until the last minute before taking action.
Many employers are burying their heads in the sand, thinking auto enrolment will somehow pass them by or that they do not need to do anything to comply with automatic enrolment. It is extremely complex and people need to allow time to plan and prepare and to adjust to new payroll systems.
It is important to notify staff of the changes being made to their salary, as money will come off their monthly wage to contribute to the pension pot.
People have welcomed auto enrolment, with five million enrolled since its introduction two years ago, and people have become more engaged since the introduction of the pension freedoms, but not fully. How many people check the value of their pension savings? How many people know how much they are paying into their pension pot or know how much their employer is contributing?”
For anyone not paying their staff through a pay as you earn (PAYE) scheme, which is likely to include those with a nanny, housekeeper or chauffeur, the ‘staging date’ set by the Regulator – the date the employer’s automatic enrolment duties come into effect – is 1 April 2017.
Automatic enrolment rules state that every business with at least one member of staff must enroll eligible employees into a qualifying workplace pension scheme and make contributions towards it and the number of employers impacted is set to rise dramatically in the coming months to around 45,000 a month in 2016 and 100,000 a month in the early part of 2017.
Micro employers should start preparing for auto enrolment now, and be seeking professional advice in good time, if they are unsure of their new responsibilities.
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