Barristers, are you ready for workplace pensions?

Doubtless, you will have seen some of the Government’s publicity surrounding auto-enrolment, also known as workplace pensions.  And you may have thought that as a self-employed barrister, it does not apply to you.  However, if you employ anyone (eg your spouse, a nanny, housekeeper or cleaner) they may be eligible for a workplace pension.

Auto-enrolment (AE) has been happening for many larger companies since 2012.   More than five million employees have already been placed into workplace pensions and eventually as many as 1.3million employers will have automatically enrolled up to 10million eligible workers into a workplace pension scheme.

A further 770,000 employers who have between 1 and 30 staff must provide and pay into a pension for their employees over the next 18 months.

It might seem like a boring administration task, but it’s one that can land you in a lot of hot water if you don’t comply within the deadlines for setting up a valid pension scheme.

What is automatic enrolment?

Auto-enrolment is a new Government scheme that makes it compulsory for employers to automatically enrol their employees in a pension scheme.

All employers will need to work out whether automatic enrolment applies to them. If you have at least one member of staff who is paid via a PAYE scheme, then AE duties apply.

What many people don’t realise is that families who employ staff, such as your spouse, nanny, cook or cleaner are treated as employees under the auto-enrolment rules, and you will be expected to provide and pay into a pension for them.

If you employ your spouse, have a nanny or cleaner and are unsure how the new legislation will affect you, here are some answers to your questions.

Are all family employed spouses, nannies, cooks and cleaners eligible?

Most will be. If your employee:

  • is over 22 and below state pension age
  • earns more than £10,000 per year

You will be required by law to pay to set up and pay into a pension scheme.

If your employee:

  • is less than 22 years of age or over state pension age
  • earns over £5,824 but less than £10,000

You are not required by law to set-up and pay into a pension. However, they are entitled to ask to be auto-enrolled. If they do, you are required by law to set-up a pension and contribute to it.

If you engage staff such as a gardener or window cleaner, you will not be required to enrol them, because in almost all circumstances they are self-employed and do not earn the majority of their income from your custom alone.

Can a worker opt-out?

Yes. However, workers cannot be asked to in any way. If found guilty of persuading an employee to opt-out, you can face a hefty fine.

When will these changes take place?

Auto-enrolment is being brought in gradually.  The date when the legislation will be applicable to you is called your staging date, and is calculated using the last two characters in your PAYE reference number.

We can find your staging date for you if you like. All we need is your Employer PAYE reference number. If you don't know your PAYE reference, it can be found on a P6/P9 coding notice or on your white payslip booklet P30BC.

What if I don't do anything?

The Pensions’ Regulator has compliance and enforcement powers to deal with employers who fail to comply on time. To date it has fined 3,045 firms a £400 fixed penalty, with a further 165 fined escalating penalties which range from £50 to £10,000 a day!

Next step?

As accountants and business advisers with our own financial services team through Cassons Financial Planning Limited, we are ideally placed to provide a straightforward approach to help you review the impact of auto enrolment on your business and then help you with the implementation of the pension scheme. As experienced advisers to group pension schemes we are aware that the reality of implementation is much more complex than the bullet points above may suggest.

Your auto enrolment obligations extend to your monthly payroll and through Cassons Payroll Bureau we will be happy to manage your payroll.

We’d be delighted to give you a quotation to advise and set up your pension scheme as well as your payroll.   You may even choose to review your own personal pension at the same time!

You may also want to check whether a workplace pension scheme has been set up for the employees of your own chambers. We are experienced in advising chambers on these matters and would be happy to have a discussion with one of your team about chambers’ requirements.

Please contact us for further details.

John Davenport, Director, Cassons Financial Planning Limited  Call 0345 337 9409

 Financial planning services for Cassons for Counsel clients are provided by Cassons Financial Planning Limited which is authorised and regulated by the Financial Conduct Authority.