JAN
03
0

Need annuity advice?

Need annuity advice?

When it comes to pensions and annuities, the Government is constantly changing the rules and moving the goalposts. It’s no wonder many dentists are struggling to know which decisions to make in regards to their own retirement.

 

Luckily money4dentists is here to help. As specialist Independent Financial Advisers (IFAs) to dentists, the money4dentists team have over half a Century’s experience in the profession and are there to help ensure you make the optimum decisions when it comes to your finances.    

 

From the economic climate to the amount in your pension and from your geographic location to your health and lifestyle; the amount you receive from an annuity depends upon a long list of variables.

 

So if you are considering retiring soon, or want to be sure to plan for a secure, worry-free future, it pays to seek out the advice of an IFA that has experience and understanding of your profession. Turn to the experts at money4dentists and take a step towards a safe financial future.

 

For more information please call 0845 345 5060 or 0754 DENTIST.

Email This email address is being protected from spambots. You need JavaScript enabled to view it. or visit www.money4dentists.com

  3185 Hits
3185 Hits
DEC
15
0

Pension Auto-Enrolment; 'We're All In'

Pension Auto-Enrolment; 'We're All In'

In October 2012 a positive duty was placed on all employers to automatically enrol ‘eligible job holders’ in to a qualifying pension scheme. For most Dental Practices the relevant date for complying is likely to be early next year. If your Practice has not been given the relevant date yet, then you should expect notification imminently. A failure to comply with this duty can result in a penalty notice with a fine or enforcement action being taken against you. Enforcement action can consist of inspections being carried out on premises, which is yet another layer of bureaucracy for Dental Practices to comply with.

In this Blog we take a look at who is eligible for auto enrolment; what is a qualifying pension scheme; and what you must do to comply with the auto enrolment requirements. We also explain the continuing duty placed on employers to re-enrol eligible job holders.

Who must comply?

All UK employers must comply with the auto enrolment requirements, even if you employ just one eligible job holder. The only exception to this is if the eligible job holder is already in a qualifying pension scheme.

If you currently do not employ anyone but offer an eligible job holder a position following your relevant date, you will have an obligation to enrol them into a qualifying pension scheme from the start of their contract.  

Who is an Eligible Job Holder?

An eligible job holder is a worker who:

•       Is working under a contract;

•       Aged at least 22 and under State Retirement Age;

•       Earns at least £10,000 (in 2015/2016);

Therefore it’s not just employees who must be enrolled; it is workers, agency staff, apprentices, and could even extend to some self-employed contractors. It will also cover permanent and temporary staff and those on fixed term contracts.

Given this is a relatively new scheme, there is limited legal guidance as to what an eligible job holder, or worker, will be for the purposes of the Pensions Act 2008. However, the definition is similar to that found within the Employment Rights Act 1996. As such, we can look to existing case law to assist with the definition of a ‘worker’ under the new act.

Interestingly, in the case of The Hospital Medical Group Limited v Westwood [2012] EWCA Civ 1005 the Court of Appeal held that a GP working as a self-employed independent contractor for a private clinic was a worker.

Dr Westwood held three positions. He was contracted by the Hospital Medical Group Ltd to perform hair loss surgery for its clients; he was referred to in marketing material as ‘one of our surgeons’. He also had his own medical practice which he worked at, and finally, he had a contract to provide advice on transgender issues with another separate clinic.

When asked to determine whether he was a ‘worker’ at the HMG Ltd, the Court of Appeal held that there is a distinction between those who market their services independently to the world in general and those who are recruited by the principal to work as an integral part of the principal's operations. Whilst there was no requirement for the clinic to provide work and for Dr Westwood to accept it, the HMG Ltd had engaged Dr Westwood because of his skills. The patients were clients of the clinic not Dr Westwood. He was therefore recruited by the principal as an integral part of the principal’s operations. He was therefore considered to be a worker despite the flexibility of his role and the terms of his written contract stating he was a self-employed independent contractor.

The parallels between Dr Westwood’s position and that of most self-employed Associate dentists are clear. As such it seems extremely likely that for the purposes of pension enrolment legislation, Associate dentists will be considered an eligible job holder working under a contract. As such they will need to be included in Practice’s qualifying pension scheme, unless of course they choose to opt out. 

Practices will also need to consider their company structure when considering who is eligible for auto-enrolment. In the case of Clyde & Co LLP and another v van Winklehof [2014] UKSC 32 the Supreme Court held that a member of a Limited Liability Partnership was a ‘worker’ for the purposes of whistleblowing legislation. In this case Ms Bates van Winklehof was an equity partner receiving a profit-related element of remuneration and a guaranteed level of remuneration. Ms Bates van Winklehof made a complaint that a managing director had accepted brides. She was subsequently removed as a partner of Clyde & Co. Ms Bates Van Winklehof alleged this removal was due to a protected disclosure, a claim a worker is entitled to bring.

The Court’s reasoning for finding that Ms Bates van Winklehof was a worker was because she could not market her services for anyone other than Clyde & Co and she was an integral part of their business. 

The result of this judgment means Limited Liability Partnerships will need to enrol their members into a qualifying pension scheme if they meet the other requirements, including the minimum qualifying earnings. If the member received drawings based on the company’s profits there is a question as to whether these would be classed as ‘earnings’. Although the definition of earnings is wide and we would recommend automatically enrolling members in any event to avoid litigation.

The position would be different for partners in a traditional Partnership Agreement, as a partner cannot employ themselves and would therefore not been deemed a worker.

As most Dental Practices are Limited companies, it is worth bearing in mind that a Director of a company is a worker only if he is also employed by the company under a contract of employment and there is at least one other person employed by the same company under a contract of employment.

Exceptions

There are some exceptions to the requirement to auto enrolling eligible job holders and these are:

•       Job holders in their notice period within six weeks of the enrolment date;

•       Job holders who have cancelled their membership after being contractually enrolled;

•       Job holders who are receiving a benefit from a lifetime allowance;

•       Job holders who have received a winding up lump sum.

What is a Qualifying Pension Scheme?

A qualifying pension scheme is an occupational or personal pension scheme or a registered pension scheme that satisfies the quality requirements. You should talk to your current or proposed pension provider to get advice on this or you can find out further information here.

The Government’s ‘NEST’ scheme is an automatic enrolment scheme, as is the NHS pension scheme. However, if the eligible job holder is not able to register in the NHS pension scheme then employers are under an obligation to find another qualifying pension scheme for them. An example of this would be someone who has retired, but later decides to return to work. If they are an eligible job holder still they will need to be enrolled into a qualifying pension scheme.  

Non-Eligible Job Holders and Entitled Workers

A non-eligible job holder is:

•       Aged between 16 and 21 or State Retirement Age and 74 and earnings in excess of £10,000; OR

•       Aged between 16 and 74 with earnings between £5,824 and £10,000

Although they are not eligible for auto-enrolment, they must be made aware of the scheme and have the right to opt-in. If a non-eligible job holder opts into a qualify pension scheme the employer must make the minimum pension contribution, which at present is 2% of which the employer pays 1%.

Finally, there are entitled workers who are:

•          Aged between 16  and 74 and has earnings under £5,824

Similarly, these workers must be made aware of the pension scheme and their right to join. However, there is no obligation for an employer to make the minimum contributions for this class of worker.

What Next?

Once a practice owner is informed of their relevant staging date they will need to:

·         Find an appropriate qualifying pension scheme;

·         Provide workers with information about the pension auto enrolment before it takes place; and

·         Enrol any eligible job holder into a qualifying pension scheme if they do not opt out.

To find your relevant staging date, click on this link.

It has been suggested that the process can take up to 12 months to complete so we recommend preparing early.

You need to write to employees within 6 weeks of the staging date. For an example letter to send to eligible job holders and an opt out form, click on this link.

Ongoing Duty

There is an ongoing duty to auto enrol. Even after your staging date has passed you will need to be aware of the following re-enrolment dates:

  • As soon as a job holder becomes eligible the employer must auto enrol. You have one month to make the necessary arrangements;
  • After three years the employer must auto enrol any job holders who previously opted out;
  • If a scheme no longer qualifies as a relevant scheme the employer must enrol the job holder into a relevant scheme.

Employment Protection Safeguards

The Pensions Act contains specific duties for employers to safeguard their workers’ rights in connection with auto-enrolment. It should be noted that these safeguards apply regardless of whether you have reached your staging date yet, and will apply to current and potential job holders. Below is a brief outline of the employment protection safeguards currently in place; a more detailed look at these can be found here.

Prohibited Recruitment Conduct. Employers must not ask questions or make statements as part of the recruitment process that indicate that an individual's application may depend on whether or not they opt out of auto-enrolment. This is enforced by the Pensions Regulator; it does not give rise to a separate claim in the Employment Tribunal by the individual.

Inducements. This is any action which has the sole or main purpose of inducing a job holder to either opt out or leave a pension scheme, or inducing an entitled worker to leave a pension scheme. An example of this would be re-negotiating contractual terms at a lesser rate if the sole or main purpose is to take into account the cost of implementing pension auto-enrolment for that individual. Again this is enforced by the Pensions Regulator; it does not give rise to a separate claim by the individual.

Right not to Suffer a Detriment.  A worker has the right not to suffer a detriment by their employer on the grounds that:

  • any action was taken, or was proposed to be taken, with a view to enforcing a requirement under the auto-enrolment regime in favour of the worker; or
  • the employer was prosecuted for an offence under section 45 of the PA 2008 as a result of action taken for the purpose of enforcing a requirement of the auto-enrolment regime in favour of the worker; or
  • any requirement of the auto-enrolment regime applies to the worker, or will or might apply.

If a worker does suffer a detriment then this will give rise to a claim that can be pursued in the Employment Tribunal. As above, re-negotiating terms could be seen as detrimental treatment. Alternatively, offering new workers lower rates to take into account the direct cost of pension auto-enrolment for that individual could be seen as a detriment.

The situation may be different if pension auto enrolment causes your Practice financial hardship; this could potentially be seen as a valid reason to re-negotiate contracts. However, this will be fact sensitive depending on the circumstances of your business, so if you are planning to take direct action then you should seek specific legal advice.  

Automatic Unfair Dismissal. If you dismiss an employee and the main or principal reason for that dismissal is one of the three points highlighted above under ‘right not to suffer a detriment’ then that dismissal will be deemed automatically unfair and the employee can pursue an Employment Tribunal claim. This right only applies to employees; not workers.

Whistleblowing. Workers are already protected from detrimental treatment as a result of blowing the whistle on their employer. If a worker makes a complaint to the Pensions Regulator and suffers a detriment as a result of such a complaint, then they will have protection under whistleblowing legislation. In the case of a worker this could include their contract being terminated; so whilst they may not have a right to claim unfair dismissal they may have a claim for whistleblowing.

This is yet another financial burden being placed on small businesses. However, given the consequences of not complying with the law, it is important to know what you must do and when; ensuring you are prepared in advance will help take the stress out of implementing pension auto enrolment and help you plan for the future.

Pension Auto Enrolment is a vast area of law and as such this Blog gives an overview of your duties. For more detailed information you can visit the Pensions Regulator website here

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11500 Hits

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