The Bar Council is proposing to hike its practising certificate fees next year in order to fund a ‘very significant’ £5.4m deficit in its pension scheme.
The representative body has proposed in a budget consultation paper that fees rise by 12% as part of its plans to balance the books. It expects fees to remain at that level for five years.
According to the paper, published on 8 November, the proposals will result in a £13 increase on practising certificate fees for the lowest earners, a £198 increase for the highest earners and will increase PCF income by £1.3m each year.
The increase was necessary because the council’s defined benefit pension scheme, which operated from 1974 to 2013, ‘ran into deficit', the council said. The scheme also included employers from the barristers' regulatory body the Bar Standards Board. The organisations employ around 170 people.
The council needs to raise approximately £5.4m over five years to meet the deficit by 2021.
‘We are now facing a very significant deficit as a result of matters beyond our control,’ the paper said.
It added further difficulties may arise in 2017/18 and could lead to reductions in funding or increases in expenditure – though it said the PCF rise would be solely used to tackle the pension deficit.
The council had considered a buy-out and said its triennial valuation report showed the estimated cost would be £16m.
That would have transferred the liabilities to an insurer and absolved the council of further liability. However, the council said a buy-out was not ‘affordable at this time’.
After 2021, it would aim to decrease fees so that it collects £1.1m per year. Eventually this could allow it to build a buy-out fund to discharge the pension liability completely – though it added that this could ‘take ten years’.
The proposals will be submitted to the Legal Services Board for consideration in December.
Barristers face practising fee rise to tackle £5.4m pension black hole
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