The latest court decision regarding the Scottish Solicitors’ Staff Pension Fund has been made in the hope to recover unpaid pension contributions from firms to their employees. The judgement was made by Lord Carloway in the case against Motherwell solicitors, Marshall Ross Munro (MRM), a firm which argued they should not have to pay their part of the deficit (£90,000) due to partnership adjustments made in 1989, 2000 and 2006.
However, Lord Carloway went against Lady Wolffe’s earlier decision that MRM were not liable and, instead, stated the changes within the firm were not sufficient enough to cancel their duties as employers to pay (due to continued trading under the same name and office space). This is bad news for small firms who signed up to the fund as this decision now makes all employers liable to contribute.
About the Pension Fund
No matter the size of the company, a workplace pension scheme is now a legal requirement for all employees. The Scottish Solicitors’ Staff Pension Fund, which provides pensions to legal firms’ employees, closed to new members in 2003. Employers, however, are expected to continue funding the scheme to make sure its trustees receive the payments they are entitled to upon retirement. The amount each firm has to pay varies depending on factors such as:
- their share of the overall deficit (this is calculated by how many employees joined the scheme),
- the length of service of the employee, and
- the employees’ salary.
Small firms and pension contributions
Small firms will inevitably be hit the hardest for signing up to the Solicitors’ Staff Pension Fund. This strain is not just seen within this particular funds’ deficit, but more generally with regards to the increase in pension contributions. Currently, the pension contribution for employers has risen from one to two per cent of the employee’s salary. This is expected to rise again as of April 2019, up to three per cent. A survey by Bibby, (a financial services firm), found 16% of 1,002 SMEs felt the increased contributions would put a level of stress on their business while 14% said they would have to freeze staff recruitment because of their struggling budget. It is crucial that smaller firms take appropriate action to make sure their pension contribution is being paid because, similar to the MRM case, it could lead to the funds’ trustees making a legal claim against you.
McKinstry Practice Management – Bespoke Consultancy Services, Glasgow
As a seasoned practice manager, I believe that no matter the law, making adequate and proper pension provisions for staff encourages a better work environment as well as positive staff relationships. As a proactive and progressive employer, I hope I can assist other small firms in Glasgow and throughout Scotland with any concerns regarding their current pension scheme payments. Do not delay and contact me today.