We need to talk about... Pensions

We really do need to talk about this. I am a little horrified how few chambers (and smaller law firms) know enough (or indeed anything at all) about the new Auto-Enrolment Pensions. Those people who do know a little about it quite often say to me "Oh we don't to worry about that now - it's years away for an organisation of our size" - but then usually can't tell me just how far away it is.

Some background might help. Auto-enrolment is a system by which every employee will be automatically part of a pension scheme to which both the government and the employer will have to pay in. Individual employees can choose not to be a part of this, but experience with large firms, which are already part of the scheme, suggests that very few will choose to opt out of the system.

So - when is it coming in? Well that depends on the size of your business. On the assumption that most of the chambers I deal with have fewer than 30 employees (the minimum cut-off that the Pensions Regulator outlines), the answer is some time between November 2015 and April 2017 (depending on the last two characters of your PAYE employers code - see here for the detail).

I can already imagine some rolling eyes from members of chambers and the expression "I was right - it's ages away so we don't need to think about it yet" being used.

I disagree. Each employer will be paying a minimum of 3% of each persons' pernsionable salary (which includes bonus, overtime etc) but there is a total minimum of 8% which must be contributed and so if the employer is going to only pay the minimum then the employee will have to pay 5% - which, of course, they will generally see as a 5% cut in wages. Both of you need time to get used to the payments (although the 8% is 'rolled-in' itself between now and October 2018) and so should consider setting up a scheme early and, perhaps, adding a 1% contribution a year for both parties. Note that doing that, you still won't avoid a 'jump' in payments if you are in the last batch that are required to set this scheme up. Now is not too soon to be thinking about this.

You should be making sure that employees know about Auto-enrolment - perhaps even taking the unusual step of having a meeting with them all and asking about how they would prefer to do this. Before any meeting, however, chambers needs to know what they want to do - do they want to avoid a cash-flow shock and not start until they have to, then taking a 3% hit in one year (and not worrying too much about the 5% hit for the employees until they all complain about it); or would they prefer to work into the scheme? Are you going to pay only the legal minimum of 3% or are you going to offer, say, 4% so that contributions are half-and-half with the employee? Are you going to offer more?

This means that chambers needs to be up to speed with the scheme and know all about it so that sensible and informed decisions can be made.

Chambers will also need to decide what sort of scheme they will offer and who will provide and administer the scheme.

I know that almost no members of chambers want to talk or think about pensions for their employees - but now is the time to start. Perhaps you could think about a scheme that members of chambers could join too...

More details on all of this from the Pension Regulator's web site here - or get in touch for a translated view. I'd be happy to explain what is necessary and to help with the planning process.

Getting the message right - the V word...

I am always surprised at the poor press that barristers get. The public's perception of a barrister in my fantastically unscientific survey (i.e. I asked those friends who weren't lawyers) is that lawyers are posh, articulate, and usually very highly paid.

I'm not sure where that last perception has come from. Yes it is true that some barristers - usually commercial lawyers - are very well rewarded for the work they do. Most, however, work to generate a comfortable (and no more) existence. My surprise, however, is that the barristers' union (for want or another work), the Bar Council, seems to have been unable or unwilling to change the perception.

I was struck again by this since I am again acting as Interim Chambers Director - this time for East Anglian Chambers, based in Ipswich (but throughout the region). I am working there three days a week and had briefly forgotten that barristers seem to do the business of chambers after 8pm or before 7 am.

Let's do a quick calculation. Assume that our barrister earns £100,000 a year. That sounds a lot doesn't it? But our barrister is self-employed (as they mostly are - certainly almost all the good ones) and so that is a turnover figure. We need to take off VAT - leaving £80,000. Next come overheads - chambers will take a percentage. Let's say that's 17.5% (that's about average). Suddenly our barrister has only £66,000 left from which to pay other costs (including travel) and tax. It doesn't seem like quite such a huge number any more, does it?

Assuming that travel is about £1,000 per month I will take a figure for other costs of £20,000 - which is probably very light. So - now there is £46,000 left. Let's say that they put in ten hours a day - which is about right  - and then another ten hours over the weekend (probably a vast under estimate). That's a 60 hour week. Being self-employed, most barristers will be looking at about a 280 to 300 day year. Being generous and taking the lower figure, this comes down to a daily rate of £164.29 or £16.43 an hour.

I'm not trying to act as an apologist for barristers. They are well paid in comparison to many people, but it still isn't the sort of money that the Ministry of Justice has been slinging around.

Many criminal barristers will be earning much less that £100,000 too.

My point is this. Barristers generally work long and hard for what turns out to be a good but far from generous salary. Their representative body should be shouting about this from the roof tops. Yes, of course some barristers earn millions - but so do some doctors and we rarely begrudge them.

It is important that the message - the right message - is got across. Barristers are good value - that is the word we should all be using.