Staff will soon have to pay pensions contribution to carers they 'employ'

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Employers may be fed up pensions changes, but this week they are being reminded to make sure their staff know about the next phase of auto-enrolment, which could have an unexpected impact on them.

Pensions auto-enrolment rollout will imminently apply to those with 1-30 employees, which means normal employees will be defined as employers themselves, if they have, for instance, a nanny to manage their childcare (or any other carer). As an employer, the rules will insist they contribute to their employee's pension.

Employees who will become employers will need to pay a pensions contribution if their employee earns more than £10,00 a year (the average wage for a nanny is more than £26,000).

The change could impact tens of thousands of staff. Parents who share a nanny will have to share their contribution responsibilities, and it is their responsibility to set up tax the NI paperwork for their staff member.

To start with employees-cum-employers will have to pay 1% of their employee's qualifying earnings, as does the carer (around £240 each per year if the carer employed has a salary of £30,000 per year). By 2017 however, this will rise to a joint employer-employee contribution level of 5%.