Auto-enrolment – who really pays?

netmums

Pensions Minister Ros Altmann has written a letter to The Times, showing her disappointment to an article published that negatively covered the issue of families having to pay their nanny pensions, because of auto-enrolment.

In her response, Altmann said she was disappointed to read the article ‘Netmums warning over nanny pensions’ and in particular the negative comments about the burdens of automatic enrolment on families which employ a nanny.

I’ve spent some time on Netmums and I can’t find the “rising level of panic” in their forums due to the new legislation. However I am not a Mum ,don’t have a nanny and will take Anne-Marie’s word for it.

There is another website “Mumsnet” and this does have a thread on auto-enrolment in which there is real concern expressed, not by the employers but by the nannies! You can read the thread here.

Here’s what kicks the thread off

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.


Nannies don’t need protecting – they need self-confidence!

It says a lot for the vulnerability of nannies that they consider the right to a pension contribution from their employer’s a threat to their livelihoods.

Of course parents have the right not to employ nannies and there may be some who see the administration and contribution to their nannies’ workplace pension as an obligation too far. But as other posts on the thread make clear, the obligations are not that severe and is it really in the interest of nannying for it to become a non-pensioned occupation? I;m with Ros Altmann..

“I make no apology for believing that workers in all industry sectors, not just some, should be given the opportunity to save into a pension. Nannies deserve a secure retirement just as much as the families they serve,”

In her letter, Ros Altmann also gives some assurance over the cost of running a workplace scheme

“As for the administrative burden, we are determined to ensure, that all employers particularly small and micro employers who may have the greatest concerns, are supported as much as possible by the regulator,” 

The people that Ros Altmann need to talk to about this are Nannytax, a really strong  payroll bureau that is working flat out to manage the 90+ employers of nannies, staging auto-enrolment this summer in the “trial run” for 2016-17.  Nannytax pay over 10,000 nannies and if anyone should be able to comment about the issues of setting up and managing auto-enrolled pensions, it should be them.

Playpen


Practical solutions

I know one or two families with nannies – one quite vocal in her opposition to auto-enrolment who has recently become a Director of Scottish Widows. While I have sympathy as a small employer myself, the best help I can give such people is practical. Such employers only tend to have a nanny for a few years, the cost of setting up a workplace pension has to be minimal, the cost of running it even less.

hi res playpen

The workplace pensions that are set up for nannies in the next couple of years need to be portable, while the original employer may only contribute while the child(ren) are young, the nanny may have a number of periods of engagement.

The workplace pension must be adaptable, capable of working with a variety of payrolls and under differing contribution structures.

Above all, the workplace pensions should work for nannies so they get the best possible security and wealth in retirement relative to the money paid into their pension plan.

The workplace pension is for a nannies life and not just for the original employment.

I hope that as we start to consider workplace pensions for the vulnerable disassociated staff of nanny and caring agencies – as well as the millions of staff working for teaching and cleaning and IT contracting agencies, we accept that their work is every bit as “pensionable” as those who work for larger companies on a more permanent basis.

If auto-enrolment can serve a secondary social purpose of narrowing the gap between those in full-time permanent employment and those working for agencies, then it will be even more successful than it already is

nannytax

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Auto-enrolment – who really pays?

  1. David says:

    Who really pays? The consumer of the pension.

    It’s just another tax in that the NI contributed funds will simply be used for general purposes in future and we’ll rely on our DC pots for what was once a tax provided service.

    It’s also a tax that will funnel a great deal of money into buying government debt today, repaid from our children’s economic activity when we retire… so just like the current NI system, but made into a DC pot and risked on the financial markets rather than directly paid, much more efficiently, from central government as a promise.

    How AE can work out more efficient over a lifetime of saving is beyond me.

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