Summary and implications

On 23 May, I reported that, as a result of a ruling of the Supreme Court (Clyde & Co LLP v Bates van Winkelhof), Limited Liability Partnerships (LLPs) may be required to automatically enrol their partners into a qualifying pension scheme.

The Pensions Regulator has now confirmed to us that LLPs should all be assessing whether any of their partners are "workers" and, if so, they will be subject to the automatic enrolment legislation. There is no single factor indicating whether a partner is a "worker" but relevant considerations include integration within the organisation and whether they provide their services exclusively to the LLP. It seems likely that many partners within professional service LLPs (and elsewhere) are likely to be "workers". However, partners will only have to be automatically enrolled if they receive "qualifying earnings" (which includes salary, wages and commission but not genuine profit share). If they are "workers" but do not have "qualifying earnings" then they still have the right to request to be enrolled into a registered pension scheme and the right to be provided with certain prescribed information.

Automatic enrolment, if required, should take effect from the LLP's original staging date (with backdated contributions where appropriate). The partner will still have the option to opt-out once enrolled and would need to do so if he does not want to lose any relevant HMRC protections (individual advice should be taken on this if appropriate). If the partner is an active member of a qualifying pension scheme already (and has been at least since the staging date) then no further action need be taken.

LLPs affected by this ruling should take urgent advice regarding compliance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.