Public Service Pensions and Judicial Offices Bill [HL]

Report stage
Monday 29th November 2021 Lords Chamber

Report

15:40

Clause 1: Meaning of “remediable service”

Amendment 1

Moved by

[Viscount Younger of Leckie]

1: Clause 1, page 1, line 7, leave out “a person’s service” and insert “any continuous period of service of a person”
Member’s explanatory statement
This amendment clarifies that the definition of “remediable service” applies separately in relation to service of a person that takes place at different times (so that a person may have some service that is “remediable service” and some that is not, and may have more than one period of remediable service).

[Viscount Younger of Leckie (Con)]

My Lords, before I turn to the amendments in this group, I will begin by briefly reminding the House of the driving force behind this Bill and why it is so important that we get it right.

In the light of the Court of Appeal’s judgment, the Government have taken steps to provide an effective remedy to the discrimination that arose in public service pension schemes. The Government have sought to approach this matter responsibly from the outset, and this Bill is key in ensuring an effective remedy for the 3.4 million people who are affected. At the heart of the Bill is fairness and equal treatment for the public servants on whom we all rely. To ensure that we achieve this objective, the Bill is underpinned by the core principles of greater fairness between lower and higher earners, fairness for the taxpayer, future sustainability and affordability of public service pensions.

I recognise that tabling a large volume of amendments is highly unusual at this stage of a Bill’s passage. I want to take a moment to explain why this approach has proved necessary—indeed, crucial—to ensuring a robust and effective remedy. As we have all acknowledged, this is a complex and technical matter. The Bill covers more than 40 schemes which each individually have their own layers of detail and complexity. We are dealing with a somewhat unprecedented issue, and retrospective changes on this scale have not previously been required for occupational pension schemes. However, it is undoubtedly vital that, despite the complexity, we get this right.

Since the Bill was introduced, the Government have continued to work with the schemes, stakeholders and departments to check and re-check it to ensure that it will deliver our commitments to remove the discrimination and offer a complete and effective remedy. The amendments I have tabled today reflect that work and clarify, correct or adjust the Bill to ensure that it works correctly for each of the schemes.

The first group is large and consists of technical amendments. The House will hopefully be pleased to hear that I will not seek to set out the detail of each and every amendment, but I hope your Lordships will find it helpful if I explain the themes that they address. I will of course be happy to turn to specific amendments if your Lordships have any questions.

A large number of the amendments in this group deal with a single theme. In reviewing the Bill, we recognised that a gap exists in how some of the processes operate for members who die before they are able to make a deferred choice. So, 44 amendments are needed to correct the position and ensure that the Bill provides an effective remedy for instances in which a member sadly dies before they reach their retirement. The reason why so many amendments are needed to achieve this outcome is that it must be applied across all the key areas of the remedy so that, for example, any correction of pension benefits or member contributions in relation to a deceased member can be addressed with the member’s personal representatives. The changes must also be made across the provisions for the main schemes and those for the judiciary.

The next theme is amendments which have arisen from work that we have undertaken with each of the public service pension schemes. There are a number of differences between the schemes within the scope of the Bill—for example, to reflect the different needs of the workforces. We have identified some scheme-specific issues that must be reflected in the Bill to ensure that the remedy operates correctly for their members.

15:45

Amendment 5 ensures that the remedy correctly applies to members who were subject to fair deal arrangements. This refers to instances in which employees are subject to a compulsory transfer from the public sector to the private sector, and therefore a period of service in a private sector pension scheme does not count as a

“disqualifying gap in service”

when assessing their eligibility for the remedy. I am grateful to the trade unions for identifying the need for this amendment and I am happy that this has been addressed.

Turning to the firefighters, a technical change is made to Clause 1 setting out the scope of the remedy, to ensure that all affected members of the firefighters’ schemes are included. This clarification is necessary to reflect the fact that the eligibility criteria in certain schemes for firefighters were slightly different to those provided in all other arrangements.

The Armed Forces pension schemes contain features that reflect the unique nature of the Armed Forces. Members of the Armed Forces may qualify for an early departure payment when they leave the service and a separate pension benefit when they subsequently reach pensionable age, which is potentially many years later. Amendments 13 and 16 introduce new clauses to the Bill ensuring that these members make their decision about both entitlements at the time they leave service, therefore avoiding having to revisit payments made under the early departure scheme in future. Similarly, an amendment is made to Clause 10 ensuring that members of the Armed Forces who are discharged as a result of ill health can make an election at the correct time—for example, the point at which they become entitled to an ill-health lump sum on the grounds of incapacity for service. One further amendment is made for the Armed Forces: Clause 88 is amended to ensure that restrictions in the Armed Forces Act 2006 which prohibit pension or pay from being assigned and thus would conflict with the operation of the remedy do not apply to the operation of Part 1 of the Bill.

Turning to family courts, the amendments also deal with specific issues regarding the judiciary. The Bill as drafted allows the Lord Chancellor to consider only the resourcing needs of the magistrates’ court when reappointing retired magistrates. Amendments will allow the Lord Chancellor additionally to consider the needs of the family court, in which magistrates also sit, when making such decisions. This will allow the judiciary to boost capacity when needed to better meet the demands placed on both courts.

Finally on this theme, there are scheme-specific amendments for members of the judiciary and Civil Service. Members of these schemes were provided with the option of alternative pension arrangements and could choose to participate in partnership pension accounts. These are defined contribution arrangements, rather than the main defined benefit schemes. The Bill already allows for this decision to be reversed where the member made their decision as a result of the discrimination that arose. A number of technical amendments to the Bill are being made to ensure that where members wish to be reinstated in the main judicial or civil service pension schemes, that can be done correctly and the member placed in the position they would have been in, had the discrimination not occurred.

Turning to the third theme, a number of corrective or clarifying changes are made to ensure that the Bill operates as intended. Amendments to Clause 1 ensure that where a member has multiple periods of service, those periods are separately considered in determining whether they are subject to the remedy provided by the Bill. These clarifications ensure that a member who was affected by the discrimination will be subject to remedy for each and every period of service that was affected. These amendments are replicated for the judiciary. Following on, there are multiple legacy schemes in most public service workforces. Amendments to Clause 4 ensure that it is clear which legacy scheme a member’s remediable service should be returned to, which is the scheme they would have been eligible to participate in had the discrimination not occurred.

An amendment to Clause 20 clarifies that scheme regulations that make provision about special cases may modify the application of Chapter 1 of the Bill to certain persons. This ensures that scheme regulations can provide an accurate remedy for members with less straightforward circumstances, for example, those who have mixed service—your Lordships may know that otherwise as tapered protection—or have partially retired. Again, equivalent amendments are made for the judiciary.

An amendment is made to Clause 29 to provide greater clarity around the scope of the clause, to ensure that all cases where a person has obtained an immediate detriment remedy are captured—that is, members in relation to whom a scheme has taken actions to correct that member’s position outside the operation of this legislation. Following on, further minor amendments are made to definitions and references to ensure that there is consistency across the Bill.

The final theme specifically deals with tax-related consequences of remedy, to ensure that members are returned to their correct position absent the discrimination. Amendments to Clauses 20 and 55 provide that scheme regulations may make provision for cases where a liability for a lifetime allowance charge or annual allowance charge is settled via the scheme administrator. This is where the scheme pays the tax liability on behalf of the member and adjusts their pension benefits to recover the amount from future payments. The amendments ensure that schemes can vary a member’s benefits to take account of amounts that the member has paid in the past or will pay in the future in respect of the lifetime allowance tax charge, or the annual allowance tax charge, via the scheme.

Although it has been rather lengthy, I hope that my explanation of how the amendments in this group will work has proved helpful. I reiterate that these amendments all share the objective of ensuring that members affected by the discrimination identified by the courts are able to receive a comprehensive remedy in line with the overall approach set out in the Government’s consultation response, on a fair and equal basis. I beg to move.

[Lord Davies of Brixton (Lab)]

My Lords, I do not have a current interest to declare, but it would be appropriate to mention that, until the end of August when I gave up the work, I was the paid adviser to a number of trade unions, advising them on this specific issue. It appears in the register of interests for another year, but I no longer have any direct interest.

I have three questions for the Minister. First, he foreshadowed at Second Reading that a raft of amendments was coming. I think it has been suggested that there will be further amendments; clearly not in this House, but there will be a further batch when the Bill is considered in the Commons, which will come back to us. Is this still the case?

Secondly, and more specifically, the Government have made proposals for changes to the cost control mechanism, for which primary legislation will be required. Is it envisaged that they will be made to this Bill or will a separate Bill come forward at a later stage? Before I make my third point, I first thank the Minister very much; he has been extremely open and informative. He has gone out of his way to make sure that we understand what these amendments are for, and I welcome that.

One of the amendments picks up a point I made in my Amendment 6 in Committee relating to the potential payment of remedial AVCs—a wonderful concept. My amendment was obviously very simple, and we now have a much more extensive and substantial change. It will be a complex issue and I recognise that it will be complex to administer. One of the problems we have is that there is a demand, but we have no way of telling how big it will be. The respective scheme advisory boards will have to look at and decide what proportionate and appropriate steps they need to take. I hope the Minister will indicate that they are prepared to facilitate that.

[Baroness Janke (LD)]

I too thank the Minister for his time and for the engagement he has provided throughout the Bill, particularly regarding these amendments. Considering the scale, complexity and magnitude of the Bill, together with the millions who will be affected by it, I understand that these amendments try to cover a variety of contexts and circumstances to provide a comprehensive remedy to the previous discrimination. I recognise that the whole range of contexts and circumstances means that many will require fine detail. I hope these will, in many ways, support the millions of public sector workers who have suffered discrimination as a result of earlier circumstances.

We will see later some of the specific issues we raised in Committee. I hope the Minister can assure us that these amendments have taken account of those. We will explore that later.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I thank the Minister for his explanation of this extensive group of amendments. I too thank him and his Bill team for engaging with me and my noble friend Lord Davies leading up to Report and for the explanation of the late additions to the Bill. The Minister recognised that it is unusual to bring forward such a large number of amendments at such a late stage. However—and this is unusual on our part—we are content that he has done so. As my noble friend said, we understand that there may be further amendments when the Bill goes to the other place.

We have no objection to the amendments. They are largely technical and clarifying in nature. For example, they would ensure that the Bill operates as intended when a member of one of the affected pension schemes dies. I also accept that adding these amendments now will ensure that the Bill will start its scrutiny in the House of Commons with these points clarified, which we welcome. For these reasons, we are content with this group.

[Viscount Younger of Leckie (Con)]

My Lords, I will make a few very short closing remarks. I thank the noble Lords, Lord Davies and Lord Ponsonby, and the noble Baroness, Lady Janke, for their brief remarks. In particular, I thank the noble Lord, Lord Ponsonby, for his supportive remarks and his understanding—there is probably a better word to use—of what we needed to do for this group of amendments and the next one. I appreciate it.

As I said in my opening remarks, the Bill deals with a complex and unprecedented issue. These amendments reflect the several months of continued work with the schemes, stakeholders and departments to check and recheck the Bill to ensure that it will offer a complete and effective remedy for members affected by the discrimination identified by the Court of Appeal.

The noble Lord, Lord Davies, raised a good point about what might happen next with potential amendments in the Commons, but I reassure him that, as I outlined, this is a highly complex area and the Government are committed to ensuring that members in all relevant schemes receive an effective remedy. We will continue to work closely with stakeholders, including the pension schemes in scope, to consider whether any areas of the Bill require further clarification to ensure legal operability.

I also took note of the points raised by the noble Lord, Lord Davies, concerning additional voluntary contributions and the cost control mechanism. The noble Baroness, Lady Janke, alluded to the fact that we will be addressing them in subsequent groups. I think it probably makes sense to do that, but I have taken note of the noble Lord’s questions, and I am sure he will raise these matters as the afternoon goes on.

Amendment 1 agreed.

16:00

Amendments 2 to 5

Moved by

[Viscount Younger of Leckie]

2: Clause 1, page 2, line 3, after “that” insert “all of”
Member’s explanatory statement
This amendment clarifies that the second condition (which is concerned with whether service is pensionable) must be met in relation to all of the service in question.

3: Clause 1, page 2, line 8, after “normal pension age” insert “or another specified age”
Member’s explanatory statement
This amendment recognises that some legacy schemes offered transitional protection to people who met conditions relating to a lower age than normal pension age.

4: Clause 1, page 2, line 9, leave out subsections (5) and (6) and insert—
“(5) The third condition is that the person—(a) was, on 31 March 2012 or any earlier day, in service in any employment or office that is pensionable service under—(i) a Chapter 1 legacy scheme,(ii) a judicial legacy scheme (within the meaning of Chapter 2), or(iii) a local government legacy scheme (within the meaning of Chapter 3), or(b) is not within paragraph (a) and was, on 31 March 2012, in service as a firefighter which entitled the person to be an active member of a relevant firefighters’ legacy scheme.(6) The fourth condition is that there is no disqualifying gap in service falling within the period—(a) beginning with— (i) in a case in which the third condition is met by virtue of subsection (5)(a), the day after the most recent day in relation to which that condition is met;(ii) in a case in which the third condition is met by virtue of subsection (5)(b), 1 April 2012, and(b) ending with the day before the first day of the service in question.”Member’s explanatory statement
This amendment adjusts the third condition in this clause to cater for the fact that certain schemes for firefighters gave transitional protection to those who on 31 March 2012 were in active service but were not active members of the scheme. The fourth condition is amended consequentially.

5: Clause 1, page 2, line 21, leave out from “which” to end of line 24 and insert—
“(a) is pensionable service under—(i) a Chapter 1 scheme,(ii) a judicial scheme (within the meaning of Chapter 2), or(iii) a local government scheme (within the meaning of Chapter 3), or(b) is, as a result of a Fair Deal transfer, pensionable service under a Fair Deal scheme.”Member’s explanatory statement
This amendment ensures that service in a private sector scheme under Fair Deal arrangements (which, before 2013, governed the pension arrangements that had to be offered to those in public service who were compulsorily transferred to the private sector) does not count as part of a “disqualifying gap in service” for the purposes of the fourth condition.

Amendments 2 to 5 agreed.

Clause 4: Meaning of “the relevant Chapter 1 legacy scheme” etc

Amendments 6 and 7

Moved by

[Viscount Younger of Leckie]

6: Clause 4, page 4, line 12, leave out from “person” to “the” in line 16 and insert “from becoming an active member of”
Member’s explanatory statement
This amendment simplifies the condition in subsection (2)(b).

7: Clause 4, page 4, line 24, leave out paragraphs (a) to (c) and insert—
“(a) at any time after the closing date, the person—(i) opted that their service in the employment or office in question should no longer be pensionable service under a Chapter 1 scheme, or(ii) ceased to be in service in the employment or office in question,(b) at any later time before 1 April 2022, the person—(i) opted that their service in the employment or office in question should again be pensionable service under a Chapter 1 scheme, or(ii) resumed service in the employment or office in question,(c) at that time, the rules of the Chapter 1 legacy scheme mentioned in subsection (1) prohibited a person from becoming an active member of the scheme, and”Member’s explanatory statement
This amendment expands the special case dealt with in subsection (3) in two ways. First, so that it covers those who remained in legacy schemes after the closing date, subsequently opted out, and then decided to opt back in to a Chapter 1 scheme; and second so that it covers those who left service in the employment or office in question after the closing date and subsequently resumed service.

Amendments 6 and 7 agreed.

Clause 5: Election for retrospective provision to apply to opted-out service

Amendments 8 to 11

Moved by

[Viscount Younger of Leckie]

8: Clause 5, page 5, line 42, leave out from “which” to “or” in line 43 and insert “a remediable service statement is first provided in respect of the member”
Member’s explanatory statement
This amendment ensures that the definition is apt for a case in which the member to whom a remediable service statement relates has died.

9: Clause 5, page 6, line 26, at end insert—
“(c) in cases in which any assets and liabilities that are referable to pension contributions made by or on behalf of the person have been transferred out of a partnership pension account, a condition requiring the payment to the scheme of an amount in respect of the transfer.”Member’s explanatory statement
This amendment makes clear that scheme regulations may require that, in a case in which an amount has in the past been transferred out of a partnership pension account, an election under this clause can be made only if a payment in respect of the transfer is made to the Chapter 1 legacy scheme.

10: Clause 5, page 6, line 29, leave out “(1)”
Member’s explanatory statement
This amendment clarifies the reference in subsection (7) of this Clause to the definition of “the relevant Chapter 1 legacy scheme” in Clause 4.

11: Clause 5, page 6, line 30, leave out “the” and insert “any”
Member’s explanatory statement
This amendment clarifies the reference in subsection (7) of this Clause to the definition of “the relevant Chapter 1 legacy scheme” in Clause 4.

Amendments 8 to 11 agreed.

Clause 7: Elections by virtue of section 6: timing and procedure

Amendment 12

Moved by

[Viscount Younger of Leckie]

12: Clause 7, page 7, line 38, leave out from “which” to “or” in line 39 and insert “a remediable service statement is first provided in respect of the member”
Member’s explanatory statement
This amendment ensures that the definition is apt for a case in which the member to whom a remediable service statement relates has died.

Amendment 12 agreed.

Amendment 13

Moved by

[Viscount Younger of Leckie]

13: After Clause 8, insert the following new Clause—
“Persons with remediable service in more than one Chapter 1 legacy scheme
(1) This section applies where—(a) an election is made by virtue of section 6 (immediate choice to receive new scheme benefits) in relation to the remediable service in an employment or office of a member (“M”) of a Chapter 1 legacy scheme that is pensionable service under the scheme, and(b) M has any remediable service in that employment or office that is pensionable service under another Chapter 1 legacy scheme.(2) If M is a relevant member within the meaning of section 6 in relation to the scheme mentioned in subsection (1)(b), the election has effect as an election by virtue of section 6 in relation to M’s remediable service that is pensionable service under that scheme (as well as having effect as such an election in relation to M’s remediable service that is pensionable service under the scheme mentioned in subsection (1)(a)).(3) If M is a relevant member within the meaning of section 9 (deferred choice to receive new scheme benefits) in relation to the scheme mentioned in subsection (1)(b), the election has effect as an election by virtue of section 9 in relation to M’s remediable service that is pensionable service under that scheme (as well as having effect as an election by virtue of section 6 in relation to M’s remediable service that is pensionable service under the scheme mentioned in subsection (1)(a)).”Member’s explanatory statement
This amendment ensures that where a person has remediable service in an employment or office that is pensionable under more than one legacy scheme, the person can opt for new scheme benefits in respect of service in that employment or office in all of those schemes, but cannot opt for new scheme benefits in only some of those schemes.

Amendment 13 agreed.

Clause 10: Elections by virtue of section 9: timing and procedure

Amendments 14 and 15

Moved by

[Viscount Younger of Leckie]

14: Clause 10, page 9, line 5, leave out from “which” to end of line 6 and insert “it is reasonably expected that, if an election were made, new scheme benefits would become payable under the scheme to or in respect of the member.”
Member’s explanatory statement
This amendment adjusts the rule in subsection (2) so that it operates by reference to the time that benefits would become payable in accordance with an election (which may be a different time to the time at which benefits would become payable if no election were made).

15: Clause 10, page 9, line 24, leave out “relevant”
Member’s explanatory statement
This amendment removes a redundant word from subsection (6).

Amendments 14 and 15 agreed.

Amendment 16

Moved by

[Viscount Younger of Leckie]

16: After Clause 11, insert the following new Clause—
“Persons with remediable service in more than one Chapter 1 legacy scheme
(1) This section applies where—(a) an election is made by virtue of section 9 (deferred choice to receive new scheme benefits) in relation to the remediable service in an employment or office of a member (“M”) of a Chapter 1 legacy scheme that is pensionable service under the scheme, and(b) M has any remediable service in that employment or office that is pensionable service under another Chapter 1 legacy scheme. (2) If M is a relevant member within the meaning of section 9 in relation to the scheme mentioned in subsection (1)(b), the election has effect as an election by virtue of section 9 in relation to M’s remediable service that is pensionable service under that scheme (as well as having effect as such an election in relation to M’s remediable service that is pensionable service under the scheme mentioned in subsection (1)(a)).(3) If M is a relevant member within the meaning of section 6 (immediate choice to receive new scheme benefits) in relation to the scheme mentioned in subsection (1)(b), the election has effect as an election by virtue of section 6 in relation to M’s remediable service that is pensionable service under that scheme (as well as having effect as an election by virtue of section 9 in relation to M’s remediable service that is pensionable service under the scheme mentioned in subsection (1)(a)).”Member’s explanatory statement
This amendment ensures that where a person has remediable service in an employment or office that is pensionable under more than one legacy scheme, the person can opt for new scheme benefits in respect of service in that employment or office in all of those schemes, but cannot opt for new scheme benefits in only some of those schemes.

Amendment 16 agreed.

Clause 13: Pension contributions: pensioner and deceased members

Amendment 17

Moved by

[Viscount Younger of Leckie]

17: Clause 13, page 11, line 42, at end insert—
“(6A) A reference in subsection (6) to pension contributions paid by M includes, in relation to any pension contributions paid under a partnership pension account, such sums as are deducted by M under section 192 of FA 2004 (relief at source).”Member’s explanatory statement
This amendment clarifies that “the paid contributions amount” defined in subsection (6) includes tax relief deducted at source.

Amendment 17 agreed.

Clause 14: Pension contributions: active and deferred members (immediate correction)

Amendments 18 to 21

Moved by

[Viscount Younger of Leckie]

18: Clause 14, page 12, line 29, leave out “M” and insert “the appropriate person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

19: Clause 14, page 12, line 33, leave out “M” and insert “the appropriate person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

20: Clause 14, page 12, line 39, at end insert—
“(5A) A reference in subsection (5) to pension contributions paid by M includes, in relation to any pension contributions paid under a partnership pension account, such sums as are deducted by M under section 192 of FA 2004 (relief at source).”Member’s explanatory statement
This amendment clarifies that “the paid contributions amount” defined in subsection (5) includes tax relief deducted at source.

21: Clause 14, page 12, line 41, at end insert—
“(6A) In this section “the appropriate person” means—(a) M, or(b) if M is deceased, M’s personal representatives.”Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 18 to 21 agreed.

Clause 15: Pension contributions: active and deferred members (deferred correction)

Amendments 22 to 25

Moved by

[Viscount Younger of Leckie]

22: Clause 15, page 13, line 22, leave out “M” and insert “the appropriate person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

23: Clause 15, page 13, line 26, leave out “M” and insert “the appropriate person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

24: Clause 15, page 13, line 32, at end insert—
“(5A) A reference in subsection (5) to pension contributions paid by M includes, in relation to any pension contributions paid under a partnership pension account, such sums as are deducted by M under section 192 of FA 2004 (relief at source).”Member’s explanatory statement
This amendment clarifies that “the paid contributions amount” defined in subsection (5) includes tax relief deducted at source.

25: Clause 15, page 13, line 40, at end insert—
“(7A) In this section “the appropriate person” means—(a) M, or(b) if M is deceased, M’s personal representatives.”Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 22 to 25 agreed.

Clause 18: Voluntary contributions

Amendment 26

Moved by

[Viscount Younger of Leckie]

26: Clause 18, page 15, line 34, leave out subsection (2)
Member’s explanatory statement
This amendment is in consequence of the government amendment of clause 92 which applies the definition of “voluntary contributions” to the whole of Part 1.

[Viscount Younger of Leckie]

My Lords, this second group consists of three technical areas of amendments. I reassure the House that my remarks will be somewhat shorter than on the previous group. As before, I will set out the key themes in each area, rather than talking through the detail of each amendment. The three key themes these amendments relate to are: first, matters concerning voluntary contributions; secondly, flexibility in delivering the remedy in respect of judicial scheme members; and, thirdly, the closure of old schemes. Once again, I will be happy to turn to specific amendments if your Lordships have any questions they would like to raise.

Before I turn to the first area of amendments, which relate to member voluntary contributions, I thank the noble Lord, Lord Davies of Brixton, to whom I am most grateful for raising this matter in Grand Committee, which has assisted the Government in developing these new amendments. I gave the noble Lord assurances in Grand Committee that the Government would consider how the Bill should provide for members who were prevented from making voluntary contributions to the legacy schemes as a result of the discrimination that arose, and I am pleased to be able to bring forward amendments to that effect now.

First, these amendments insert new clauses so that scheme regulations may allow members to enter into remedial voluntary contributions arrangements where they would have done so had the discrimination not arisen. Additionally, the amendments ensure that information that must be provided to members includes information about remedial voluntary contribution arrangements as well as details of the eligibility criteria and the process for entering into those arrangements.

Secondly, these amendments will amend Clause 18 to ensure that the provisions work correctly in relation to persons other than a member who may obtain rights in relation to a member’s voluntary contributions.

Thirdly, the amendments clarify that, where compensation is paid to members of the judiciary representing an amount that was paid as voluntary contributions less the tax relief they received at the time, any rights that were associated with those contributions are extinguished. The amendments also clarify that, where the member is deceased, the compensation should be made to the member’s personal representatives.

Finally, the amendments add a new clause to provide that no new arrangements to pay voluntary contributions may be entered into after 31 March 2022 in a legacy scheme. This reflects the fact that the legacy schemes will close on that date. However, any existing voluntary contributions arrangements that members may have entered prior to 1 April 2022 may continue. Additionally, this prohibition does not apply to the new clauses which permit members to enter into remedial voluntary contributions arrangements in the specific circumstances I have set out.

Let me now turn to the second area of amendments in this group. These are technical amendments required to ensure the remedy can be applied most effectively in respect of judicial scheme members. Clause 65 defines the election period as a three-month period beginning with such date as is specified by the relevant authority and that the relevant authority may extend the election period in relation to a particular person, if they consider it just and equitable to do so.

It is important that judges in scope of the remedy have enough time to make an informed decision regarding their scheme membership for the remedy period. Therefore, amendments are made to Clauses 65 and 60 to provide for further flexibility to respond to judges’ individual circumstances by allowing for there to be more than one election period, and for an information statement to be sent to each member before the start of their respective election period.

Finally, I come to the third and final area in this group. This last area amends the valuations and governance framework for public service pension schemes to ensure that it operates correctly when old schemes established under the Public Service Pensions Act 2013, or its Northern Ireland equivalent, are closed and new schemes are established. In the present context, these amendments are most relevant to the reformed judicial pension scheme that is set to replace the 2015 scheme. However, the same issues will arise if, in future, other schemes are closed and new ones created.

Schemes that are closed to future accrual do not require future stand-alone valuations. A new clause will ensure that these are no longer required and that an employer cost cap need not be set for the purpose of measuring changes in the costs of those schemes under the cost control mechanism.

The new clause will also allow existing governance frameworks to be carried over from old schemes to new schemes. Additionally, an amendment to Clause 80 will ensure that the cost control mechanism can operate correctly by ensuring that the employer cost cap of a new scheme can be set after the regulations have been created.

I hope the House will agree that, important though they are, all three sets of amendments I have outlined in this group make necessary technical changes to the existing legislation so as to ensure that the remedy can operate as intended. With that, I beg to move.

[Baroness Janke (LD)]

My Lords, I thank the Minister for responding to many of the issues that arose in Committee and welcome the additional flexibility with regard to the voluntary contributions and the period when remedial contributions can be made.

I would like to question the eligibility for voluntary contributions. One of the areas we discussed was about people—for example, with caring responsibilities—who would wish to make up their pension and in their legacy scheme would have been able to do that. Examples include women who have taken time out to look after children or people with caring responsibilities who have done the same. Will these members have the chance to make these remedial contributions to augment their pensions, as they would have been able to within the legacy scheme? Perhaps the Minister could clear that up for me.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, once again I thank the Minister for his explanation of this group. We are content for these changes to be made to the Bill. I particularly welcome the provisions on voluntary contributions, which will now allow for a member to make voluntary contributions where they would have done, but did not due to the pension changes that led to the arising discrimination. This responds to a concern raised by pension schemes and by my noble friend Lord Davies in Committee, which was recognised by the Minister. I wonder whether the Minister can give us an assurance that more information will be forthcoming, over the Bill’s passage through the Commons, on how this will be provided for in practice.

I also welcome the provision providing flexibility for judges over their election period and that every member must be provided with an information statement by the scheme before their election period starts. At later stages this afternoon we will come back to this question of how information and guidance are provided to members and how they will access support. That is in an amendment to be moved by the noble Baroness, Lady Janke. I am glad to see that this has been recognised, at least to some extent, in this group. We are happy to support these amendments.

[Viscount Younger of Leckie (Con)]

My Lords, once again, my closing remarks will be relatively brief. I thank the noble Baroness, Lady Janke, and the noble Lord, Lord Ponsonby, for their broad support for these amendments. As one or two questions were raised, I will give some more information on additional voluntary contributions, which may be helpful, particularly with regard to the question on eligibility raised by the noble Baroness.

The proposed new clauses provide that scheme regulations may not permit a member to enter into such arrangements after one year from the day on which the member is provided with their remediable service statement, or their information statement in the case of the judiciary, or such later time as the scheme manager considers reasonable. The proposed new clauses will be subject to Treasury directions, which I understand we will be speaking about in a later group—under Clause 24 for Chapter 1 schemes and under Clause 58 for judicial schemes. This is set out in Amendments 45 and 90, and is consistent with the similar powers in Part 1 of the Bill. These directions will help to ensure that scheme regulations take a consistent approach, which is very important in providing members with remedial voluntary contribution arrangements.

I hope that this offers some explanation but, again, bearing in mind the technical nature of the noble Baroness’s question, I will be keen to read Hansard and will write if further information is required.

Amendment 26 agreed.

Amendments 27 to 30

Moved by

[Viscount Younger of Leckie]

27: Clause 18, page 16, line 9, leave out “member in question” and insert “person whose rights are extinguished”
Member’s explanatory statement
This amendment recognises that persons other than the member who pays voluntary contributions (for example their spouse) may obtain rights in consequence of the contributions.

28: Clause 18, page 16, line 11, leave out from beginning to “secured” in line 12 and insert “rights are conferred under a Chapter 1 scheme that would have been”
Member’s explanatory statement
This amendment recognises that persons other than the member who pays voluntary contributions (for example their spouse) may obtain rights in consequence of the contributions.

29: Clause 18, page 16, line 14, after “scheme” insert “manager”
Member’s explanatory statement
This amendment is to clarify that a payment of compensation under regulations under subsection (6)(c) of this Clause would, like other payments of compensation by virtue of Part 1 (such as those under Clause 21), be paid by the relevant scheme manager.

30: Clause 18, page 16, line 14, leave out “in question” and insert “who paid the contributions or, if that member is deceased, that member’s personal representatives”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 27 to 30 agreed.

Clause 20: Further powers to make provision about special cases

Amendments 31 to 37

Moved by

[Viscount Younger of Leckie]

31: Clause 20, page 17, line 17, at end insert—
“(aa) provision about the benefits payable to or in respect of a member who has remediable service in an employment or office where—(i) there is another Chapter 1 scheme that provides benefits for persons in that employment or office, and(ii) the two schemes provide (or in any circumstances might provide) benefits to or in respect of a person in relation to the same period of service;”Member’s explanatory statement
This amendment is to enable provision to be made where service may entitle a person to benefits under more than one scheme (for example, some service in the armed forces entitles a person both to early departure payments under one scheme and (when they are older) to pension payments under another scheme).

32: Clause 20, page 17, line 29, leave out paragraph (d) and insert—
“(d) provision about cases in which the scheme administrator of a Chapter 1 scheme pays a liability under section 217 or 237B of FA 2004 (joint liability of scheme administrator to lifetime allowance charge or annual allowance charge);”Member’s explanatory statement
This amendment generalises the power in subsection (2)(d) of this Clause so that it confers power to make provision about any case in which a member’s liability to a lifetime allowance charge, or an annual allowance charge, is paid under the “scheme pays” facility (under which the liability is paid by the scheme administrator and the member’s benefits are reduced in consequence).

33: Clause 20, page 17, line 32, at end insert—
“(e) provision about cases in which remuneration is or was payable to a person on the satisfaction of a condition relating to whether any remediable service of the person is or was, or is or was eligible to be, pensionable service under a particular Chapter 1 scheme (including provision requiring any such remuneration that has been paid to be repaid).”Member’s explanatory statement
This amendment is to enable provision to be made under this Clause about employments etc (such as the armed forces) in which a person’s pay may be determined by reference to whether their service is (or is eligible to be) pensionable service under a particular scheme.

34: Clause 20, page 17, line 32, at end insert—
“(f) provision about cases in which a former member of the armed forces—(i) is, disregarding section 2 (1), entitled under regulation 19 of AFEDP 2014 (lump sum awards: incapacity for armed forces service) to a payment determined (to any extent) by reference to the person’s remediable service in an employment or office, or(ii) would be entitled under that regulation to such a payment if the benefits payable to the person, so far as determined by reference the person’s remediable service in the employment or office, were new scheme benefits.”Member’s explanatory statement
This amendment is to enable provision to be made under this clause to ensure that the Chapter works fairly for members of the armed forces who would be entitled to an incapacity lump sum under the new armed forces scheme, even if they would not have been entitled to such a payment under the rules of the legacy scheme.

35: Clause 20, page 17, line 32, at end insert—
“(2A) Scheme regulations for a Chapter 1 new scheme may make provision about injury and compensation benefits payable under a relevant injury and compensation scheme to or in respect of a member who has remediable service in an employment or office.(2B) Provision made under subsection (2A) may in particular be made by amending the relevant injury and compensation scheme.(2C) In subsections (2A) and (2B) and this subsection—(a) “injury and compensation scheme” means a pension scheme that is listed in Schedule 6 to PSPA 2013 or Schedule 6 to PSPA(NI) 2014 (existing injury and compensation schemes);(b) an injury and compensation scheme is “relevant”, in relation to a Chapter 1 new scheme, if it is connected with the Chapter 1 new scheme;(c) a reference to “injury and compensation benefits” payable under an injury and compensation scheme is a reference to—(i) in the case of an injury and compensation scheme in relation to which Schedule 6 to PSPA 2013 or Schedule 6 to PSPA(NI) 2014 specifies particular benefits, those benefits;(ii) in the case of any other injury and compensation scheme, any benefits payable under the scheme.”Member’s explanatory statement
Where Chapter 1 of Part 1 retrospectively alters pension benefits payable to or in respect of a person, this may require retrospective changes also to be made to injury and compensation benefits to which the person is entitled (for example where their amount is calculated in a way that takes account of the amount of pension benefits payable). This amendment provides a power to ensure that appropriate provision can be made in such cases.

36: Clause 20, page 17, leave out lines 35 to 38 and insert—
“(a) provision modifying any provision of this Chapter in its application to persons of a description specified in the regulations;(b) provision corresponding to, or applying, any provision of this Chapter, with or without modifications.”Member’s explanatory statement
This amendment clarifies the way in which special cases may be dealt with in regulations.

37: Clause 20, page 17, line 38, at end insert—
“(4) In this section— “AFEDP 2014” means the Armed Forces Early Departure Payments Scheme Regulations 2014 (S.I. 2014/2328);“modifying” includes disapplying or supplementing (and cognate expressions are to be construed accordingly);“scheme administrator” has the same meaning as in Part 4 of FA 2004 (see section 270 of that Act);“the armed forces” has the same meaning as in PSPA 2013 (see paragraph 8 of Schedule 1 to that Act).”Member’s explanatory statement
This amendment inserts definitions required for other government amendments of this Clause.

Amendments 31 to 37 agreed.

Clause 21: Power to pay compensation

Amendments 38 and 39

Moved by

[Viscount Younger of Leckie]

38: Clause 21, page 17, line 42, at end insert “or, in the case of deceased members, their personal representatives.”
Member’s explanatory statement
This amendment ensures that, where a member has died, compensation can be paid to the member’s personal representatives if they incur a compensatable loss.

39: Clause 21, page 18, line 1, after “member” insert “, or by a member’s personal representatives,”
Member’s explanatory statement
This amendment ensures that, where a member has died, compensation can be paid to the member’s personal representatives if they incur a compensatable loss.

Amendments 38 and 39 agreed.

Amendment 40

Moved by

[Lord Davies of Brixton]

40: Clause 21, page 18, line 13, at end insert—
“(6A) In subsection (5), a loss “attributable to the application of any provision of, or made under, this Chapter” includes a loss incurred by a member with remediable service who—(a) is transferred to the new scheme and reaches the required number of years of pensionable service to retire with full benefits under the legacy scheme, but(b) is unable to access the full value of those benefits because they must continue to work to retire with full benefits under the new scheme.”Member’s explanatory statement
This amendment provides that certain losses arising from the interaction of the rules of the new and legacy schemes respectively will be compensated.

[Lord Davies of Brixton (Lab)]

My Lords, this amendment is about what has been termed “the pension trap”. Much concern has been expressed about this phenomenon by different groups and members of different schemes, not least the Police Superintendents’ Association and the Fire Brigades Union. It is important to be clear that this issue affects all the major public service schemes. It is more salient in the uniformed service schemes as they previously had a much lower pension age, so the impact of the pension trap is more significant, but it runs through all the schemes. When you put two schemes together that work on significantly different bases, problems can arise that perhaps we should have spotted at an earlier stage of the discussions on the scheme.

The key issue concerns where you combine schemes with different normal retirement ages in the legacy and new schemes respectively, and the impact of extending working lives in that situation. Extending working lives has been a theme of the reform of public service pensions, so we should perhaps have thought through this a little more clearly. I may have been a little to blame myself in my previous life. When the issue was first raised I was somewhat doubtful but, the more I have looked at it, the more I have come to appreciate that it is a real problem.

The underlying problem is where the combined benefits, old and new, do not reflect the benefits that the members lose by having a later retirement age. They suffer a net loss. With most private sector schemes and the new state or public service schemes, if you defer your retirement, you get some credit: you lose a year’s worth of pension because you have decided to retire a year later, but the money that you have surrendered by doing so is used to increase the subsequent pension. Whether you take the pension at 65, 60 or 67, overall, the broad value of your benefits remains the same. This contrasts with the situation in most, if not all, of the significant public service schemes, where, if you defer your retirement, you simply lose that year’s benefit and receive no credit for it. The reason for this difference between public and private schemes is lost in the mists of time.

16:15

The problem now is that scheme members are effectively forced to defer their retirement to accrue benefits in the new scheme but, because they are forced to defer their benefits in the legacy scheme, they are losing money. This can be significant amounts for those involved. I provided a detailed example in Committee, and I will not go through it all again—but, for example, a police constable who will be aged 40 next year and has been in the service since joining at 18 has accrued a decent pension under the legacy scheme. They could have retired at 51 on an unreduced pension but, because they are required to remain in service to further build their pension in the new scheme, they cannot afford to take it. Each year that they put off retirement in the legacy scheme, they lose the pension for that year, which they otherwise would have expected. A typical sum might be as much as £18,000 a year. So they put off their retirement until they are 52, and lose a year’s pension but are still required to face a significant reduction in their new pension because they are taking it early. Ultimately, if they keep working until they are 60, when they can get their full pension under the new scheme, they have lost nine years’ worth—at £18,000 a year—of pension funds in the legacy scheme. They incur a further loss because, each year that they stay in service, the lump sum that they can take from the scheme is reduced as well. We are talking about significant sums because of the interaction between the two schemes that they are required to belong to in order to accrue a decent pension.

The members concerned think that this simply cannot be right, and I share that view. It was not the intention that, when people were asked to work longer than they originally expected, they would lose substantial amounts in the value of their pension because of that. I hope that the Minister will give an indication that the Government take the problem seriously and realise that there is an issue here. I readily admit that my amendment does not completely solve the problem—no doubt I will be told so—but it effectively raises it and puts it before the Government. They can then give an indication that they take the problem seriously and will seek from the respective scheme advisory board—each public service pension scheme has one—a workable solution so that people to whom we owe a substantial debt do not incur a potentially unintended loss from the new combined scheme to which they have to belong.

[Baroness Janke (LD)]

I thank the noble Lord, Lord Davies, for his explanation of the amendment. I know we had quite a lot of discussion about this in Committee. My understanding of it in this specific case is how it affects members of the Police Superintendents’ Association. Previously, a number of years’ service entitled them to their pensions whereas the new scheme is age-related. As the noble Lord, Lord Davies, said, that prevents them being able either to retire early and still have their pension, as was guaranteed, or work later to augment their pension.

This is an important issue, particularly in terms of public services such as the police, where undertakings were given and promises made. These were parts of agreements about pay levels and general conditions of service. So I believe the Government have some obligations here, and I very much hope that this can be looked at further as the scheme progresses and that it can be evaluated and solutions found. I hope the Minister can give us some clarification on that. I certainly support the spirit of the amendment and hope that we can resolve this in future.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, my noble friend Lord Davies has given a thorough explanation of this issue, which will impact members of certain public service pension schemes. I simply echo the hope that the Government will look carefully at this issue before the Bill goes into its Commons stages.

To reinforce the point made by the noble Baroness, Lady Janke, the Police Superintendents’ Association has reported that this issue is one of the most-raised questions in sessions that it is holding with its members, and it is trying to talk through the possible remedies and related pension issues as they affect police superintendents. This is an unintended consequence that has arisen due to the current complexities, rather than an intentional outcome of what the Government are seeking to do.

With that in mind, could the Minister inform us, first, whether the Government have considered ways to remedy this issue, in which certain members will be caught, and, secondly, what ongoing consultation and engagement are the Government undertaking with those who are affected? I will be interested to hear the Minister’s response.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Lord, Lord Davies of Brixton, for raising this issue again today, and I thank other noble Lords for their comments.

Clause 21 provides the power for scheme managers to pay compensation for certain losses incurred by members. Compensation can be paid for losses that satisfy any of the three conditions set out in subsections (4) to (6) and are of a description specified in Treasury directions.

It might be helpful for the House if I set out the background and purpose of the clause. I hope I can provide the clarifications that have been asked for by the noble Baroness and both noble Lords. The purpose of the clause is to confer power on scheme managers to make payments in relation to compensatable losses. This is an important element of the remedy provided by the Bill. The Government have set out to Parliament, in public announcements and to the courts that we will take steps to remedy the discrimination that occurred when transitional protection was provided to some members when the public pension schemes were reformed in 2015. That means taking steps to place members as far as possible back into the position where they would have been had the discrimination not occurred.

Clause 21 provides for compensation in relation to losses incurred as a result of the discrimination or the retrospective remedy provided by the Bill, or in respect of certain tax losses. The clause allows for matters that are not directly remedied by other provisions of the Bill or by the intended scheme regulations to be put right. As I understand it, having listened carefully to the speech from the noble Lord, Lord Davies, the intended effect of his amendment is to compensate members who reach the required length of service to retire with full benefits in their legacy scheme before they reach the necessary age to retire with full benefits in their reformed scheme. The amendment appears to relate closely to representations made by police staff associations, which a number of speakers mentioned, regarding members of the 1987 and 2015 police pension schemes who reach 30 years of service in the legacy pension scheme before reaching minimum pension age in the reformed scheme.

However, by referring to “full benefits” in the reformed pension scheme, the noble Lord’s amendment appears to go considerably beyond these representations and proposals, effectively requiring compensation for those below normal pension age, not minimum pension age, in the reformed scheme. I know that he raised the question of whether this applies to all public servants. Perhaps I may just gently put him right—I defer to his greater knowledge but I will put him right on this—that it does not.

As implied by the reference to the required number of years in the amendment text, this issue arises for members of schemes where retirement on full benefits is based on length of service rather than age. The 1987 police pension scheme falls into that. Members of other public service pension schemes will often move from a scheme where the normal pension age is 60 to a scheme where the NPA is equal to state pension age. However, it is not quite the same issue as the normal pension age and a legacy scheme, for these members will be higher than the minimum pension age in their reformed scheme. I hope that offers a reasoned explanation.

Turning to the police pension scheme, under the Bill all members in active service on 31 March 2022 will be moved into the reformed 2015 police pension scheme in respect of service from 1 April 2022 onwards. That is what is known as a “prospective remedy” to ensure that all active members are treated equally from that date onwards. I am grateful for the hard work and extraordinary dedication shown by police officers. The Government support the police and the important work that they do to protect the public, and recognise that they face changing demands from crime.

The reformed police pension scheme is, rightly, one of the most generous pension schemes in the United Kingdom. Moreover, members with service under the 1987 police pension scheme are already afforded significant protections in the Bill, including by maintaining the final salary link of the 1987 scheme and the protection of weighted accrual. This means that accruals in the 1987 scheme will be calculated in relation to a member’s final salary when they retire or otherwise leave the police pension scheme of 2015 in the future, not their salary at the point when they leave the police pension scheme of 1987 on 31 March 2022. The improved accrual rate linked to length of service in the older scheme is also protected and will remain the same in relation to service in those legacy schemes.

The Government have been considering the issues raised by the police representatives and this amendment carefully, including the question of whether there are viable policy mitigations. I want to answer the important point raised by the noble Lord, Lord Ponsonby, on engagement. The Home Office is also currently consulting on detailed regulations to implement the prospective McCloud remedy for the police pension scheme; I hope that provides some reassurance that this is an important matter. That includes communication as well. However, the Government must not take action that would be contrary to the Bill’s intention to remove the discrimination identified by the courts and to ensure that all members are treated equally from 1 April 2022 by accruing service in the reformed schemes, regardless of their age.

It is important to stress that the Court of Appeal found in the McCloud and Sargeant cases in 2018 that the transitional protections offered under the PSPA 2013 amounted to unlawful discrimination against younger members, because they allowed older members to accrue service in the legacy schemes for longer because of their age. Accordingly, offering compensation to members depending on their age and resulting position relative to service length and normal pension age would risk perpetuating such unlawful discrimination through different means. This is an important point of clarification for the noble Lord, Lord Davies.

I thank the noble Lord for bringing attention to this issue and reassure him that the Government have been considering the position of these members, including the viability of policy solutions such as the proposal submitted by police staff associations. However, careful consideration must be given to the need to avoid introducing new discrimination against other pension scheme members—I made this point earlier—and a broadly drafted amendment to the Bill risks doing just that. I therefore ask, with that rather full explanation, the noble Lord to withdraw his amendment.

16:30

[Lord Davies of Brixton (Lab)]

I thank the Minister for his detailed reply. At the appropriate time, I will indicate my intention to withdraw the amendment.

First, I want to say that the purpose and intention of the amendment—I never believed that it was complete in itself—was to prod the Government into taking the issue seriously. The problem arises in any scheme where, if you do not take your pension at the scheme pension age, you do not get any credit for giving up the pension that you lose by deferring your retirement. That is the underlying problem, and it occurs across the public sector. It is currently far more acute, as we have been told in detail by the Fire Brigades Union and the Police Superintendents’ Association.

I have no doubt that the real solution to this issue lies in scheme-level discussions, but such discussions will take place only if the Government give an indication that they take this issue seriously and want the respective scheme advisory boards to discuss and address the issue and seek out practical solutions. Whether they can be funded, and the extent to which any solution would fall within the cost cap and so not incur substantial additional cost, would have to be addressed as part of those discussions. That is all I am asking for.

I am grateful to the House for the opportunity to raise this issue. On that basis, I beg leave to withdraw the amendment.

Amendment 40 withdrawn.

Amendments 41 and 42

Moved by

[Viscount Younger of Leckie]

41: Clause 21, page 18, line 44, leave out “the member” and insert “any person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

42: Clause 21, page 19, line 1, leave out “the member” and insert “any person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 41 and 42 agreed.

Amendment 43

Moved by

[Viscount Younger of Leckie]

43: After Clause 22, insert the following new Clause—
“Remedial arrangements to pay voluntary contributions to legacy schemes
(1) Scheme regulations for a Chapter 1 legacy scheme may make provision so as to secure that a relevant member may enter into remedial voluntary contributions arrangements.(2) In subsection (1)—“relevant member”, in relation to a Chapter 1 legacy scheme, means a member (other than a deceased member) who has remediable service in an employment or office which, after the coming into force of section 2 (1) in relation to the scheme, is pensionable service under the scheme (whether or not by virtue of that provision);“remedial voluntary contributions arrangements” means arrangements—(a) which are entered into by a member after the coming into force of section 2 (1) in relation to the scheme, and(b) under which the member pays voluntary contributions to the scheme.(3) Provision by virtue of subsection (1) may permit a member (“M”) to enter into arrangements only if the scheme manager is satisfied that it is more likely than not that, but for a relevant breach of a non-discrimination rule, M would, during the period of M’s remediable service in the employment or office, have entered into the same or similar arrangements.(4) The provision that may be made by virtue of subsection (1) includes, in particular, provision under which liabilities to pay voluntary contributions that would otherwise arise under the arrangements are reduced by tax relief amounts.(5) In subsection (4) “tax relief amounts” means amounts determined by reference to the tax relief under section 188 of FA 2004 (relief for members’ contributions) that would have been available in respect of the amounts owed if they were paid in a different tax year.(6) Provision by virtue of subsection (1) may not permit a member (“M”) to enter into arrangements after—(a) the end of the period of one year beginning with the day on which a remediable service statement is first provided in respect of M, or(b) such later time as the scheme manager considers reasonable in all the circumstances.(7) Subsection (6) does not affect the continued operation after the time mentioned in that subsection of any remedial arrangements entered into before that time.(8) In this section “non-discrimination rule” means a rule that is, or at any time was, included in a Chapter 1 scheme by virtue of—(a) section 61 of EA 2010, or(b) paragraph 2 of Schedule 1 to EEAR(NI) 2006.(9) For the purposes of this section a breach of a non-discrimination rule is “relevant” if it arises from the application of—(a) an exception to section 18(1) of PSPA 2013 made under section 18(5) to (7) of that Act, or(b) an exception to section 18(1) of PSPA(NI) 2014 made under section 18(5) to (8) of that Act.”Member’s explanatory statement
This Clause makes it possible for a Chapter 1 legacy scheme to make provision giving members with remediable service the facility to enter into new arrangements to pay voluntary contributions. The facility may only be made available to members who show that they would have entered into similar arrangements but for unlawful discrimination, and may be made available only for a limited period.

Amendment 43 agreed.

Clause 23: Interest and process

Amendments 44 and 45

Moved by

[Viscount Younger of Leckie]

44: Clause 23, page 19, line 33, leave out first “member” and insert “person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

45: Clause 23, page 19, line 33, leave out second “member” and insert “person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 44 and 45 agreed.

Clause 24: Treasury directions

Amendments 46 to 49

Moved by

[Viscount Younger of Leckie]

46: Clause 24, page 20, line 19, at end insert—
“(ha) the power to make scheme regulations by virtue of section (Remedial arrangements to pay voluntary contributions to legacy schemes) (remedial arrangements to pay voluntary contributions to legacy schemes) and any powers exercisable by virtue of such regulations;”Member’s explanatory statement
This amendment ensures that Treasury directions can be used in relation to remedial voluntary contributions arrangements.

47: Clause 24, page 20, line 23, leave out from “paid” to “or any” and insert “by or to a scheme in relation to a member”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

48: Clause 24, page 20, line 25, after “member” insert “and (if different) the person to whom or by whom the amount is to be paid or the liability is owed”
Member’s explanatory statement
This amendment ensures subsection (3) of this Clause operates as intended in a case in which an amount is payable to or by a person who is not the member who has remediable service (for example a surviving adult or personal representatives).

49: Clause 24, page 20, line 27, leave out “the member” and insert “that person or those persons”
Member’s explanatory statement
This amendment ensures subsection (3) of this Clause operates as intended in a case in which an amount is payable to or by a person who is not the member who has remediable service (for example a surviving adult or personal representatives).

Amendments 46 to 49 agreed.

Clause 26: Remediable service statements

Amendment 50

Moved by

[Viscount Younger of Leckie]

50: Clause 26, page 21, line 27, at end insert “, and
(d) a description of—(i) the arrangements (if any) that, by virtue of section (Remedial arrangements to pay voluntary contributions to legacy schemes) (remedial arrangements to pay voluntary contributions to legacy schemes), may be entered into under the scheme, and (ii) the circumstances in which, and the process by which, such arrangements may be entered into.”Member’s explanatory statement
The amendment ensures that a statement under this clause includes information to enable the recipient to decide whether they are entitled to enter into new arrangements to pay voluntary contributions, and if so how to go about doing it.

Amendment 50 agreed.

Clause 28: Application of Chapter to immediate detriment cases

Amendments 51 and 52

Moved by

[Viscount Younger of Leckie]

51: Clause 28, page 22, line 36, leave out from “if” to “in” in line 37 and insert “an immediate detriment remedy has been obtained”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

52: Clause 28, page 22, line 39, leave out from “have” to “so” in line 40 and insert “rights in respect of remediable service in relation to which an immediate detriment remedy has been obtained”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 51 and 52 agreed.

Clause 29: Persons who have “benefited from an immediate detriment remedy”

Amendments 53 to 56

Moved by

[Viscount Younger of Leckie]

53: Clause 29, page 23, line 15, leave out from “of” to “person’s” in line 16 and insert “section 28 an “immediate detriment remedy” has been obtained in relation to a”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

54: Clause 29, page 23, line 20, leave out “the” and insert “any”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

55: Clause 29, page 23, line 28, leave out second “the” and insert “any”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

56: Clause 29, page 23, line 30, leave out first “the” and insert “a Chapter 1”
Member’s explanatory statement
This amendment is to ensure that the definition in this Clause catches all cases in which a scheme makes arrangements outside the mechanism of the Chapter to give a person a remedy for discrimination of the kind the Chapter deals with, including in particular a case in which the discrimination occurred under a different scheme.

Amendments 53 to 56 agreed.

Clause 33: Meaning of “opted-out service”

Amendment 57

Moved by

[Viscount Younger of Leckie]

57: Clause 33, page 25, line 25, leave out “A person’s service” and insert “Any continuous period of service of a person”
Member’s explanatory statement
This amendment clarifies that the definition of “opted-out service” applies separately in relation to service that takes place at different times (so that some service may be “opted- out service” and some may not and a person may have more than one period of opted-out service).

Amendment 57 agreed.

Clause 35: Interpretation of Chapter

Amendments 58 to 60

Moved by

[Viscount Younger of Leckie]

58: Clause 35, page 26, leave out lines 22 and 23
Member’s explanatory statement
This amendment is in consequence of the government amendment of Clause 29(1).

59: Clause 35, page 26, line 45, at end insert—
““Fair Deal scheme” means—(a) a pension scheme that, in accordance with the Fair Deal Statement of Practice, has been certified by the Government Actuary’s Department as offering, to persons who have been subject to a Fair Deal transfer, pension arrangements that are broadly comparable with those offered to them before the transfer, or(b) a pension scheme in relation to which the obligation to give such a certificate has been waived in accordance with that statement of practice;“Fair Deal Statement of Practice” means the statement of practice entitled “Staff Transfers in the Public Sector” issued by the Cabinet Office in January 2000, as supplemented and modified from time to time;“Fair Deal transfer” means a transfer of a person’s employment from a public sector employer to a private sector employer in accordance with the Fair Deal Statement of Practice;”Member’s explanatory statement
This amendment adds definitions that are required for one of the government amendments of clause 1.

60: Clause 35, page 27, line 10, at end insert—
““a relevant firefighters’ legacy scheme” means—(a) Schedule 1 to the Firefighters’ Pension Scheme (England) Order 2006 (S.I. 2006/3432) (new firefighters’ scheme),(b) Schedule 1 to the Firefighters’ Pension Scheme (Wales) Order 2007 (S.I. 2007/1072) (new firefighters’ scheme),(c) Schedule 1 to the Firefighters’ Pension Scheme (Scotland) Order 2007 (S.S.I. 2007/199) (new firefighters’ scheme), or(d) the Annex to the New Firefighters’ Pension Scheme Order (Northern Ireland) 2007 (S.R.(N.I.) 2007 No. 215) (new firefighters’ scheme);” Member’s explanatory statement
This amendment adds a definition that is required for one of the government amendments of Clause 1.

Amendments 58 to 60 agreed.

Clause 36: Meaning of “remediable service”

Amendments 61 to 63

Moved by

[Viscount Younger of Leckie]

61: Clause 36, page 27, line 32, leave out “a person’s service” and insert “any continuous period of service of a person”
Member’s explanatory statement
This amendment clarifies that the definition of “remediable service” applies separately in relation to service of a person that takes place at different times (so that a person may have some service that is “remediable service” and some that is not, and may have more than one period of remediable service).

62: Clause 36, page 27, line 38, after “that” insert “all of”
Member’s explanatory statement
This amendment clarifies that the second condition (which is concerned with whether service is pensionable) must be met in relation to all of the service in question.

63: Clause 36, page 28, line 8, after “with” insert “the day after”
Member’s explanatory statement
This amendment ensures that 31 March 2012 (or, where the person left pensionable service before then, the final day of pensionable service) is not counted towards a disqualifying gap in service.

Amendments 61 to 63 agreed.

Clause 38: Partnership pension account: requirement to transfer and surrender rights

Amendment 64

Moved by

[Viscount Younger of Leckie]

64: Clause 38, leave out Clause 38 and insert the following new Clause—
“Partnership pension account: requirement to transfer and surrender rights
(1) Subsection (2) applies where—(a) a person (“P”) has remediable service in a salaried judicial office, and(b) any of the remediable service is PPA opted-out service.(2) A legacy scheme election in respect of P may not be made unless—(a) the relevant authority is satisfied that the steps mentioned in subsection (3) have been taken, or(b) the appropriate person has notified the relevant authority that they intend to instigate and facilitate the taking of those steps.(3) The steps are—(a) the transfer of any relevant assets and liabilities to the relevant judicial legacy salaried scheme,(b) the surrender of any entitlement to a pension under the relevant judicial legacy salaried scheme, and any right to a future pension under that scheme, that would otherwise arise under the rules of the scheme in respect of the value of the assets and liabilities transferred, and(c) if at any time any relevant assets and liabilities were transferred out of the partnership pension account (otherwise than in the course of a transfer to the relevant judicial legacy salaried scheme), the payment by the appropriate person to the relevant judicial legacy salaried scheme of an amount, determined by the relevant authority after consulting the Government Actuary, in respect of the value of the relevant assets transferred.(4) Subsection (5) applies where—(a) a person (“P”) has remediable service in a fee-paid judicial office, and(b) any of the remediable service is PPA opted-out service.(5) A legacy scheme election in respect of P may not be made unless—(a) the relevant authority is satisfied that the steps mentioned in subsection (6) have been taken, or(b) the appropriate person has notified the relevant authority that they intend to instigate and facilitate the taking of those steps.(6) The steps are—(a) the transfer of any relevant assets and liabilities to the judicial legacy fee-paid scheme,(b) the surrender of any entitlement to a pension under the judicial legacy fee-paid scheme, and any right to a future pension under that scheme, that would otherwise arise under the rules of the scheme in respect of the value of the assets and liabilities transferred, and(c) if at any time any relevant assets and liabilities were transferred out of the partnership pension account (otherwise than in the course of a transfer to the judicial legacy fee-paid scheme), the payment by the appropriate person to the judicial legacy fee-paid scheme of an amount, determined by the relevant authority after consulting the Government Actuary, in respect of the value of the relevant assets transferred.(7) In this section “the appropriate person”, in relation to a person (“P”) who has PPA opted-out service, means the person by whom a legacy scheme election in respect of P may be made (see section 43).(8) For the purposes of this section assets and liabilities are “relevant” in relation to any PPA opted-out service of a person (“P”) if—(a) they are referable to pension contributions or voluntary contributions that were made by or on behalf of P in respect of the service, and(b) they are held for the purposes of a partnership pension account.This is subject to subsection (9).(9) Where—(a) the total of the pension contributions, together with any voluntary contributions, that were paid by P in respect of the PPA opted-out service, exceeds(b) the total of the pension contributions that would have been payable by P in respect of that service if the service had been pensionable service under the judicial legacy scheme to which the relevant assets and liabilities are to be transferred,the assets and liabilities that the relevant authority, after consulting the Government Actuary, determines are referable to the excess are not “relevant” in relation to the PPA opted-out service.(10) A reference in subsection (9) to pension contributions or voluntary contributions paid by P in respect of PPA opted-out service is a reference to the amount of the contributions paid, net of any tax relief under section 188 of FA 2004 (relief for contributions) to which P was entitled in respect of them.” Member’s explanatory statement
This amendment substitutes Clause 38. The replacement Clause is updated in a number of respects, and now caters in particular for cases in which the member has died, and cases in which transfers have been made from the partnership pension account.

Amendment 64 agreed.

Clause 45: Benefits for children where election made

Amendment 65

Moved by

[Viscount Younger of Leckie]

65: Clause 45, page 34, line 10, leave out “, civil partner or other adult” and insert “or civil partner”
Member’s explanatory statement
In the judicial legacy schemes, the only adult who may be entitled to benefits on a member’s death is a surviving spouse or civil partner. This amendment therefore removes the redundant reference to other adults.

Amendment 65 agreed.

Clause 48: Pension benefits and lump sums benefits

Amendments 66 and 67

Moved by

[Viscount Younger of Leckie]

66: Clause 48, page 37, line 8, at end insert—
“(5A) If—(a) M is deceased,(b) a PPA lump sum death benefit has been paid on the death of M, and(c) a legacy scheme election has been made in respect of M,the PPA lump sum death benefit is to be treated for the purposes of subsection (4)(a) as a lump sum benefit paid under the scheme in respect of M’s remediable service in the judicial office.”Member’s explanatory statement
Where a person has opted out of the public service pension scheme available to them and instead has a partnership pension account, and the person dies, a lump sum may be paid by the department to the person’s nominated beneficiary (or, in the absence of a nomination, to the person’s personal representatives). Where a legacy scheme election is made in respect of the person, the arrangements for lump sum death benefits under the legacy scheme will apply. This amendment ensures that a correction is made for the lump sum already paid.

67: Clause 48, page 37, line 23, at end insert—
““PPA lump sum death benefit” means an amount paid by the relevant authority, on the death of a person who has a partnership pension account, to a person nominated by the deceased or to the person’s personal representatives.”Member’s explanatory statement
Where a person has opted out of the public service pension scheme available to them and instead has a partnership pension account, and the person dies, a lump sum may be paid by the department to the person’s nominated beneficiary (or, in the absence of a nomination, to the person’s personal representatives). Where a legacy scheme election is made in respect of the person, the arrangements for lump sum death benefits under the legacy scheme will apply. This amendment ensures that a correction is made for the lump sum already paid.

Amendments 66 and 67 agreed.

Clause 49: Pension contributions

Amendments 68 and 69

Moved by

[Viscount Younger of Leckie]

68: Clause 49, page 37, line 28, leave out subsections (2) to (4) and insert—
“(2) Where—(a) the paid contributions amount for an in-scope tax year in respect of M’s remediable service in the judicial office, exceeds(b) the payable contributions amount for that tax year in respect of that service,the scheme manager must (directly or indirectly) pay an amount in respect of the difference to the appropriate person.(3) Where—(a) the paid contributions amount for an out-of-scope tax year in respect of M’s remediable service in the judicial office, exceeds(b) the payable contributions amount for that tax year in respect of that service,no amount is to be paid by the scheme manager in respect of the difference to the appropriate person.(4) Where—(a) the paid contributions amount for an in-scope or out-of-scope tax year in respect of M’s remediable service in the judicial office, is less than(b) the payable contributions amount for that tax year in respect of that service,the appropriate person must pay pension contributions in respect of the difference to the scheme.(4A) A reference in this section to “the paid contributions amount” for a tax year in respect of M’s remediable service in a judicial office is a reference to the sum of—(a) the aggregate of the pension contributions that (after taking into account the effect, if any, of section 47(2), (4) and (6)) have been paid under the scheme by M in the tax year in respect of so much of the service as was not PPA opted-out service, and(b) where any of the remediable service was PPA opted-out service—(i) the aggregate of the pension contributions and any voluntary contributions that have been paid by M under the partnership pension account in the tax year in respect of the PPA opted-out service, or(ii) if lower, the aggregate of the pension contributions that (after taking into account the effect, if any, of section 39(2) to (5) or 42 (2)) were payable under the scheme by M for that tax year in respect of the PPA opted-out service.(4B) A reference in this section to “the payable contributions amount” for a tax year in respect of M’s remediable service in a judicial office means the aggregate of the pension contributions that (after taking into account the effect, if any, of section 39(2) to (5) or 42 (2)) were payable under the scheme by M for that tax year in respect of the service.(4C) In this section “the appropriate person” means—(a) M, or(b) if M is deceased, M’s personal representatives.”Member’s explanatory statement
This amendment ensures that the treatment of contributions paid to a partnership pension account is properly accounted for; it is also one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

69: Clause 49, page 38, line 19, after “contributions” insert “or voluntary contributions”
Member’s explanatory statement
This amendment ensures that voluntary contributions paid to a partnership pension account are accounted for net of tax relief.

Amendments 68 and 69 agreed.

Clause 50: Effective pension age payments

Amendments 70 to 73

Moved by

[Viscount Younger of Leckie]

70: Clause 50, page 38, line 24, leave out “Subsection (2) applies” and insert “Subsections (1A) and (2) apply”
Member’s explanatory statement
This amendment clarifies the treatment of effective pension age payments under this clause.

71: Clause 50, page 38, line 28, at end insert—
“(1A) The rights that would otherwise have been secured by the effective pension age payments are extinguished.”Member’s explanatory statement
This amendment clarifies the treatment of effective pension age payments under this Clause.

72: Clause 50, page 38, line 29, leave out “P an amount” and insert “the appropriate person an amount by way of compensation”
Member’s explanatory statement
This amendment clarifies the treatment of effective pension age payments under this clause, and is also one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

73: Clause 50, page 38, line 34, at end insert—
“(2A) In subsection (2) “the appropriate person” means—(a) P, or(b) if P is deceased, P’s personal representatives.”Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 70 to 73 agreed.

Clause 51: Transitional protection allowance

Amendments 74 and 75

Moved by

[Viscount Younger of Leckie]

74: Clause 51, page 39, line 1, leave out “P” and insert “The appropriate person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

75: Clause 51, page 39, line 4, at end insert—
“(2A) In subsection (2) “the appropriate person” means—(a) P, or(b) if P is deceased, P’s personal representatives.”Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 74 and 75 agreed.

Clause 52: Power to reduce benefits in lieu of paying liabilities owed to scheme

Amendment 76

Moved by

[Viscount Younger of Leckie]

76: Clause 52, page 39, line 17, at end insert—
“(1A) Scheme regulations for a judicial scheme may make provision under which, in a case in which a person is (by virtue of provision made under subsection (1)) not required to pay an amount to the person’s employer, the scheme manager is required to reimburse the employer.”Member’s explanatory statement
This amendment ensures that, where a person has an obligation to pay an amount to the person’s employer as a result of this Chapter (for example a requirement to repay transitional protection allowance under clause 51) and regulations under subsection (1) of this clause mean that, instead of paying the full amount immediately, the person receives reduced benefits from the scheme in retirement, the scheme is require to reimburse the employer for the amount owed.

Amendment 76 agreed.

Clause 54: Pension credit members

Amendments 77 to 79

Moved by

[Viscount Younger of Leckie]

77: Clause 54, page 39, line 41, leave out “member of the scheme” and insert “person”
Member’s explanatory statement
This amendment is to ensure that the power under Clause 54 is available in relation to the benefits payable to or in respect of any person who has a pension credit or debit under a scheme, whether or not they are regarded as a member of the scheme under its rules.

78: Clause 54, page 40, line 4, leave out “member” and insert “person”
Member’s explanatory statement
This amendment is to ensure that the power under clause 54 is available in relation to the benefits payable to or in respect of any person who has a pension credit or debit under a scheme, whether or not they are regarded as a member of the scheme under its rules.

79: Clause 54, page 40, line 6, leave out second “member” and insert “person”
Member’s explanatory statement
This amendment is to ensure that the power under Clause 54 is available in relation to the benefits payable to or in respect of any person who has a pension credit or debit under a scheme, whether or not they are regarded as a member of the scheme under its rules.

Amendments 77 to 79 agreed.

Clause 55: Further powers to make provision about special cases

Amendments 80 to 84

Moved by

[Viscount Younger of Leckie]

80: Clause 55, page 41, line 13, leave out paragraph (g) and insert—
“(g) provision about cases in which the scheme administrator of a judicial scheme pays a liability under section 217 or 237B of FA 2004 (joint liability of scheme administrator to lifetime allowance charge or annual allowance charge);” Member’s explanatory statement
This amendment generalises the power in subsection (2)(g) of this clause so that it confers power to make provision about any case in which a member’s liability to a lifetime allowance charge, or an annual allowance charge, is paid under the “scheme pays” facility (under which the liability is paid by the scheme administrator and the member’s benefits from the scheme are reduced in consequence).

81: Clause 55, page 41, line 16, at end insert—
“(2A) The provision that may be made by virtue of subsection (2)(a) includes, in particular, provision under which—(a) the rights that would otherwise have been secured by the payment of any voluntary contributions are extinguished, and(b) the scheme manager is required to pay the member or, if the member is deceased, the member’s personal representatives an amount by way of compensation equal to—(i) the aggregate of the voluntary contributions paid, less(ii) an amount in respect of the tax relief under section 188 of FA 2004 (member contributions) to which the member was entitled in respect of those payments.”Member’s explanatory statement
This amendment clarifies the nature of the provision that it is envisaged will be made under subsection (2)(a) for the refund of voluntary contributions.

82: Clause 55, page 41, leave out lines 19 to 22 and insert—
“(a) provision modifying any provision of this Chapter in its application to persons of a description specified in the regulations;(b) provision corresponding to, or applying, any provision of this Chapter, with or without modifications.”Member’s explanatory statement
This amendment clarifies the way in which special cases may be dealt with in regulations.

83: Clause 55, page 41, line 23, leave out subsection (4)
Member’s explanatory statement
This amendment is in consequence of the government amendment of Clause 92 which applies the definition of “voluntary contributions” to the whole of Part 1.

84: Clause 55, page 41, line 34, at end insert—
“(6) In this section—“modifying” includes disapplying or supplementing (and cognate expressions are to be construed accordingly);“scheme administrator” has the same meaning as in Part 4 of FA 2004 (see section 270 of that Act).”Member’s explanatory statement
This amendment inserts definitions required for other government amendments of this Clause.

Amendments 80 to 84 agreed.

Clause 56: Power to pay compensation

Amendments 85 to 88

Moved by

[Viscount Younger of Leckie]

85: Clause 56, page 41, line 38, at end insert “or, in the case of deceased members, their personal representatives.”
Member’s explanatory statement
This amendment ensures that, where a member has died, compensation can be paid to the member’s personal representatives if they incur a compensatable loss.

86: Clause 56, page 41, line 42, after “member” insert “, or by a member’s personal representatives,”
Member’s explanatory statement
This amendment ensures that, where a member has died, compensation can be paid to the member’s personal representatives if they incur a compensatable loss.

87: Clause 56, page 42, line 27, leave out “the member” and insert “any person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

88: Clause 56, page 42, line 29, leave out “the member” and insert “any person”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 85 to 88 agreed.

Amendment 89

Moved by

[Viscount Younger of Leckie]

89: After Clause 56, insert the following new Clause—
“Remedial arrangements to pay voluntary contributions to judicial schemes
(1) Scheme regulations for a judicial scheme may make provision so as to secure that a relevant member may enter into remedial voluntary contributions arrangements.(2) In subsection (1)—“relevant member”, in relation to a judicial scheme, means a member (other than a deceased member) who has remediable service in a judicial office which, after the end of the election period, is pensionable service under the scheme;“remedial voluntary contributions arrangements” means arrangements—(a) which are entered into by a member after the end of the election period, and(b) under which the member pays voluntary contributions to the scheme.(3) Provision by virtue of subsection (1) may permit a member (“M”) to enter into arrangements only if the scheme manager is satisfied that it is more likely than not that, but for a relevant breach of a non-discrimination rule, M would, during the period of M’s remediable service in the judicial office, have entered into the same or similar arrangements.(4) The provision that may be made by virtue of subsection (1) includes, in particular, provision under which liabilities to pay voluntary contributions that would otherwise arise under the arrangements are reduced by tax relief amounts.(5) In subsection (4) “tax relief amounts” means amounts determined by reference to the tax relief under section 188 of FA 2004 (relief for members’ contributions) that would have been available in respect of the amounts owed if they were paid in a different tax year.(6) Provision by virtue of subsection (1) may not permit a member (“M”) to enter into arrangements after—(a) the end of the period of one year beginning with the day on which a statement under section 60 (information statements) is sent in respect of M, or(b) such later time as the scheme manager considers reasonable in all the circumstances.(7) Subsection (6) does not affect the continued operation after the time mentioned in that subsection of any arrangements entered into before that time. (8) In this section “non-discrimination rule” means a rule that is, or at any time was, included in a judicial scheme by virtue of—(a) section 61 of EA 2010, or(b) paragraph 2 of Schedule 1 to EEAR(NI) 2006.(9) For the purposes of this section a breach of a non-discrimination rule is “relevant” if it arises from the application of—(a) an exception to section 18(1) of PSPA 2013 made under section 18(5) to (7) of that Act, or(b) an exception to section 18(1) of PSPA(NI) 2014 made under section 18(5) to (8) of that Act.”Member’s explanatory statement
This Clause makes it possible for a judicial scheme to make provision giving members with remediable service the facility to enter into new arrangements to pay voluntary contributions. The facility may only be made available for members who would have entered into similar arrangements but for unlawful discrimination, and may be made available only for a limited period.

Amendment 89 agreed.

Clause 57: Interest and process

Amendment 90

Moved by

[Viscount Younger of Leckie]

90: Clause 57, page 43, line 6, leave out subsection (3) and insert—
“(3) In this section “relevant amounts” mean any amounts that are payable under or by virtue of this Chapter—(a) by a person to the scheme or to an employer in relation to the scheme, or(b) by the scheme to a person.”Member’s explanatory statement
This amendment broadens the definition of “relevant amounts” so that it covers payments to a member’s employer. It is also one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendment 90 agreed.

Clause 58: Treasury directions

Amendments 91 to 94

Moved by

[Viscount Younger of Leckie]

91: Clause 58, page 43, line 29, at end insert—
“(fa) the power to make scheme regulations by virtue of section (Remedial arrangements to pay voluntary contributions to judicial schemes) (remedial arrangements to pay voluntary contributions to judicial schemes) and any powers exercisable by virtue of such regulations;”Member’s explanatory statement
This amendment ensures that Treasury directions can be used in relation to remedial voluntary contributions arrangements.

92: Clause 58, page 43, line 33, leave out from “paid” to “or any” and insert “by or to a scheme in relation to a member”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

93: Clause 58, page 43, line 35, after “member” insert “and (if different) the person to whom or by whom the amount is to be paid or the liability is owed”
Member’s explanatory statement
This amendment ensures subsection (3) of this clause operates as intended in a case in which an amount is payable to or by a person who is not the member who has remediable service (for example a surviving adult or personal representatives).

94: Clause 58, page 43, line 37, leave out “the member” and insert “that person or those persons”
Member’s explanatory statement
This amendment ensures subsection (3) of this Clause operates as intended in a case in which an amount is payable to or by a person who is not the member who has remediable service (for example a surviving adult or personal representatives).

Amendments 91 to 94 agreed.

Clause 60: Information statement

Amendments 95 to 98

Moved by

[Viscount Younger of Leckie]

95: Clause 60, page 44, line 24, leave out subsection (1) and insert—
“(1) The relevant authority must—(a) prepare a statement in relation to any person (“P”) in respect of whom a legacy scheme election or a 2015 election may be made, and(b) send it to the person who may make the election (see section 43).(1A) Subsection (1) must be complied with before the beginning of the election period in relation to P.”Member’s explanatory statement
This amendment is consequential on the government amendments of Clause 65.

96: Clause 60, page 44, line 40, after “available),” insert—
“(ca) a description of—(i) the arrangements (if any) that, by virtue of section (Remedial arrangements to pay voluntary contributions to judicial schemes) (remedial arrangements to pay voluntary contributions to judicial schemes), may be entered into under judicial schemes, and(ii) the circumstances in which, and the process by which, such arrangements may be entered into,”Member’s explanatory statement
The amendment ensures that a statement under this clause includes information to enable the recipient to decide whether they are entitled to enter into new arrangements to pay voluntary contributions, and if so how to go about doing it.

97: Clause 60, page 44, line 42, leave out “appropriate person’s”
Member’s explanatory statement
This amendment is consequential on the government amendments of Clause 65.

98: Clause 60, page 44, line 44, leave out subsection (3)
Member’s explanatory statement
This amendment is consequential on the government amendments of Clause 65.

Amendments 95 to 98 agreed.

Clause 63: Application of Chapter to immediate detriment cases

Amendments 99 and 100

Moved by

[Viscount Younger of Leckie]

99: Clause 63, page 45, line 20, leave out from “if” to “in” in line 21 and insert “an immediate detriment remedy has been obtained”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

100: Clause 63, page 45, line 23, leave out from “have” to “so” in line 24 and insert “rights in respect of remediable service in relation to which an immediate detriment remedy has been obtained”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 99 and 100 agreed.

Clause 64: Persons who have “benefited from an immediate detriment remedy”

Amendments 101 to 103

Moved by

[Viscount Younger of Leckie]

101: Clause 64, page 46, line 2, leave out from “of” to “person’s” in line 3 and insert “section 63 an “immediate detriment remedy” has been obtained in relation to a”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

102: Clause 64, page 46, line 7, leave out “the” and insert “any”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

103: Clause 64, page 46, line 15, leave out second “the” and insert “any”
Member’s explanatory statement
This is one of a number of amendments clarifying or adjusting the processes and powers under Part 1 of the Bill so that they operate as intended in cases in which a member dies.

Amendments 101 to 103 agreed.

Clause 65: Meaning of “the election period”

Amendments 104 and 105

Moved by

[Viscount Younger of Leckie]

104: Clause 65, page 46, line 29, after “period”” insert “, in relation to a person who has remediable service in a judicial office,”
Member’s explanatory statement
This amendment (together with the other government amendment of this Clause) makes the definition of “the election period” more flexible by enabling different periods to be specified for different descriptions of judge.

105: Clause 65, page 46, line 31, at end insert—
“(1A) Different dates may be specified in relation to different descriptions of person.”Member’s explanatory statement
This amendment (together with the other government amendment of this clause) makes the definition of “the election period” more flexible by enabling different periods to be specified for different descriptions of judge.

Amendments 104 and 105 agreed.

Clause 69: Meaning of “opted-out service” and “PPA opted-out service”

Amendment 106

Moved by

[Viscount Younger of Leckie]

106: Clause 69, page 47, line 42, after “to” insert “pension”
Member’s explanatory statement
This amendment clarifies the reference to pension contributions in subsection (2) of this Clause.

Amendment 106 agreed.

Clause 71: Interpretation of Chapter

Amendments 107 and 108

Moved by

[Viscount Younger of Leckie]

107: Clause 71, page 48, leave out lines 21 and 22
Member’s explanatory statement
This amendment is in consequence of the government amendment of Clause 64(1).

108: Clause 71, page 49, leave out line 9
Member’s explanatory statement
This amendment is in consequence of the government amendment of Clause 92 which applies the definition of “voluntary contributions” to the whole of Part 1.

Amendments 107 and 108 agreed.

Clause 73: Meaning of “remediable service”

Amendments 109 and 110

Moved by

[Viscount Younger of Leckie]

109: Clause 73, page 49, line 38, leave out “a person’s service” and insert “any continuous period of service of a person”
Member’s explanatory statement
This amendment clarifies that the definition of “remediable service” applies separately in relation to service of a person that takes place at different times (so that a person may have some service that is “remediable service” and some that is not, and may have more than one period of remediable service).

110: Clause 73, page 50, line 3, after “that” insert “all of”
Member’s explanatory statement
This amendment clarifies that the second condition (which is concerned with whether service is pensionable) must be met in relation to all of the service in question.

Amendments 109 and 110 agreed.

Amendment 111

Moved by

[Viscount Younger of Leckie]

111: After Clause 78, insert the following new Clause—
“Prohibition of new arrangements to pay voluntary contributions
(1) No arrangements are to be entered into after 31 March 2022 under which voluntary contributions are payable by a member of a relevant scheme to the scheme.(2) In subsection (1) “relevant scheme” means—(a) a Chapter 1 legacy scheme (within the meaning of Chapter 1),(b) a judicial legacy salaried scheme (within the meaning of Chapter 2),(c) a local government legacy scheme (within the meaning of Chapter 3),(d) the Judicial Pensions Regulations 2015 (S.I. 2015/182),(e) the Judicial Pensions Regulations (Northern Ireland) 2015 (S.R.(N.I.) 2015 No. 76), or(f) the pension scheme established for certain employees of the Secret Intelligence Service which came into operation on 1 January 1946 and was amended on 1 September 1957 and 1 July 1964.(3) Subsection (1)—(a) does not affect the continued operation after 31 March 2022 of any arrangements entered into on or before that date; (b) does not apply to arrangements entered into by virtue of section (Remedial arrangements to pay voluntary contributions to legacy schemes) or (Remedial arrangements to pay voluntary contributions to judicial schemes) (remedial arrangements to pay voluntary contributions).”Member’s explanatory statement
This Clause sets out the general rule that no arrangements to pay voluntary contributions to legacy schemes may be entered into after 31 March 2022.

Amendment 111 agreed.

Amendment 112

Moved by

[Viscount Younger of Leckie]

112: After Clause 79, insert the following new Clause—
“Amendments relating to the establishment or restriction of schemes
(1) PSPA 2013 is amended in accordance with subsections (2) to (7).(2) In section 4 (scheme manager)—(a) after subsection (3) insert—“(3A) Subsection (1) does not apply to a scheme under section 1 if—(a) the scheme is connected with another scheme under section 1, and(b) a scheme manager is provided for under subsection (1) in scheme regulations for that other scheme.”;(b) after subsection (6) insert—“(6A) The reference in subsection (6) to a statutory pension scheme includes a statutory pension scheme established (under section 1 or otherwise) after the establishment of the scheme under section 1 mentioned in that subsection.”(3) In section 5 (pension board), after subsection (2) insert—“(2A) Subsection (1) does not apply to a scheme under section 1 if—(a) the scheme is connected with another scheme under section 1, and(b) a pension board is provided for under subsection (1) in scheme regulations for that other scheme.”(4) In section 7 (scheme advisory board)—(a) in subsection (1), for “on the desirability of changes to the scheme” substitute “on—(a) the desirability of changes to the scheme, or(b) the desirability of changes to any other scheme under section 1 which—(i) is connected with it, and(ii) is not an injury or compensation scheme.”;(b) after subsection (1) insert—“(1A) Subsection (1) does not apply to a scheme under section 1 if—(a) the scheme is connected with another scheme under section 1 which is not an injury or compensation scheme, and(b) a scheme advisory board is provided for under subsection (1) in scheme regulations for that other scheme.”(5) In section 11 (valuations), after subsection (1) insert—“(1A) Subsection (1) does not apply to a scheme under section 1 if— (a) the scheme is connected with another scheme under section 1, and(b) actuarial valuations are provided for under subsection (1) in scheme regulations for that other scheme.”(6) After section 12 insert—“12A Sections 11 and 12: restricted schemes(1) Section 11(1) (valuations) does not require scheme regulations to provide for actuarial valuations to be made of a scheme to which this section applies.(2) Section 12(1) (employer cost cap) does not apply to a scheme to which this section applies.(3) This section applies to a scheme under section 1 which—(a) is a restricted scheme, and(b) is specified for the purposes of this section in Treasury regulations.(4) For the purposes of this section a scheme under section 1 is a “restricted scheme” at any time if any enactment restricts the provision of benefits under the scheme to or in respect of a person in relation to the person’s service after that time.(5) Treasury regulations under this section may include consequential or supplementary provision.(6) Treasury regulations under this section are subject to the negative Commons procedure.”(7) In section 30 (new public body pension schemes), in subsection (1)(e), for “and 12” substitute “to 12A”.(8) PSPA(NI) 2014 is amended in accordance with subsections (9) to (15).(9) In section 4 (scheme manager)—(a) after subsection (3) insert—“(3A) Subsection (1) does not apply to a scheme under section 1 if—(a) the scheme is connected with another scheme under section 1, and(b) a scheme manager is provided for under subsection (1) in scheme regulations for that other scheme.”;(b) after subsection (6) insert—“(6A) The reference in subsection (6) to a statutory pension scheme includes a statutory pension scheme established (under section 1 or otherwise) after the establishment of the scheme under section 1 mentioned in that subsection.”(10) In section 5 (pension board)—(a) in subsection (1), for “subsection (2)” substitute “subsections (2) and (2A)”;(b) after subsection (2) insert—“(2A) Subsection (1) does not apply to a scheme under section 1 if—(a) the scheme is connected with another scheme under section 1, and(b) a pension board is provided for under subsection (1) in scheme regulations for that other scheme.”(11) In section 7 (scheme advisory board)—(a) in subsection (1), for “on the desirability of changes to the scheme” substitute “on—(a) the desirability of changes to the scheme, or(b) the desirability of changes to any other scheme under section 1 which—(i) is connected with it, and(ii) is not an injury or compensation scheme.”;(b) after subsection (1) insert— “(1A) Subsection (1) does not apply to a scheme under section 1 if—(a) the scheme is connected with another scheme under section 1 which is not an injury or compensation scheme, and(b) a scheme advisory board is provided for under subsection (1) in scheme regulations for that other scheme.”(12) In section 11 (valuations), after subsection (1) insert—“(1A) Subsection (1) does not apply to a scheme under section 1 if—(a) the scheme is connected with another scheme under section 1, and(b) actuarial valuations are provided for under subsection (1) in scheme regulations for that other scheme.”(13) After section 12 insert—“12A Sections 11 and 12: restricted schemes(1) Section 11(1) (valuations) does not require scheme regulations to provide for actuarial valuations to be made of a scheme to which this section applies.(2) Section 12(1) (employer cost cap) does not apply to a scheme to which this section applies.(3) This section applies to a scheme under section 1 which—(a) is a restricted scheme, and(b) is specified for the purposes of this section in regulations made by the Department of Finance.(4) For the purposes of this section a scheme under section 1 is a “restricted scheme” at any time if any statutory provision restricts the provision of benefits under the scheme to or in respect of a person in relation to the person’s service after that time.(5) Regulations made by the Department of Finance under this section may include consequential or supplementary provision.(6) Regulations made by the Department of Finance under this section are subject to negative resolution.”(14) In section 31 (new public body pension schemes), in subsection (1)(e), for “and 12” substitute “to 12A”.(15) In section 34 (general interpretation), at the appropriate place insert—““statutory provision” has the meaning given in section 1(f) of the Interpretation Act (Northern Ireland) 1954;”.”Member’s explanatory statement
This new Clause amends the Public Service Pensions Act 2013 (and its Northern Ireland equivalent) so as to clarify and adjust the way the governance of schemes, and the valuation process, work where a scheme established under the Act for a description of persons is closed, and a new scheme under the Act is established for the same description of persons.

Amendment 112 agreed.

Clause 80: Amendments relating to employer cost cap

Amendment 113

Moved by

[Viscount Younger of Leckie]

113: Clause 80, page 56, line 3, leave out “(2) and” and insert “(1A) to”
Member’s explanatory statement
This amendment is consequential on the new subsection inserted into this Clause after subsection (1).

Amendment 113 agreed.

Amendment 114

Moved by

[Lord Davies of Brixton]

114: Clause 80, page 56, line 3, leave out “(2) and (3)” and insert “(1A) to (3).
(1A) In subsection (4) omit paragraph (c).”Member’s explanatory statement
The amendment removes from the calculation of the employer cost cap the effect of changes in the cost of connected schemes, including the cost of rectifying the unlawful discrimination.

[Lord Davies of Brixton (Lab)]

My Lords, I raised this issue at Second Reading in the context of questioning the use of directions. I believe that there is a general issue here about the respective weight given to primary legislation, regulations subject to approval by one or both Houses, and directions, which are the decision of the Treasury. Clearly, there is a balance to be drawn here on the appropriate level of parliamentary scrutiny; it is a debate that we should have, but it is not one I propose to pursue any more in the context of this Bill.

However, some concerns remain about issues that are being dealt with through directions which, I believe, should be subject to parliamentary scrutiny. In the context of this Bill, there are two issues of concern. The first is the decision that the cost of the remedy—that is, the remedy required to address the issue of age discrimination—should be counted as a member cost in the cost-control mechanism. The second issue is that, in that calculation, the costs of the remedy should be spread over a period of four years.

This is beginning to verge on technical issues but, at heart, these are policy decisions, and ones that should be subject to parliamentary scrutiny. They go far beyond what have been described. This legislation amends the Public Service Pensions Act 2013, and there was a report on that legislation, looking at the directions, which said that the directions did not need parliamentary scrutiny because they were simply technical matters of actuarial practice. My argument today, on those two issues—and I am going to focus only on the issue of whether this is a “member cost”—is around whether this is a technical matter of actuarial practice or whether it is a policy decision that should be subject to parliamentary scrutiny.

There is no doubt that the decision to make this a member cost will mean that members end up paying more money or receiving lower benefits. It will directly affect the benefits that they receive. The issue was raised in Committee, and the Minister at that stage maintained the position that

“Treasury directions … exercise a particular power, rather than creating a new power”.—[Official Report, 11/10/2021; col. GC 353.]


I would argue that the decision to make this a member cost as part of the cost-control mechanism goes beyond the exercise of a particular power and creates a new power, and hence it should be considered as regulations.

This is a complicated issue, and, to understand it, you need to have a clear understanding of the purpose of the cost-control mechanism. It is not, as the Government have suggested, a mechanism for assessing the value of pensions; this is not something that directly affects the calculation of the contribution rate being paid for the scheme. It simply affects the cost-control mechanism, which is the trigger for deciding whether changes should be made to the scheme. The costs of the scheme are the costs of the scheme; whatever the benefits are, they are the costs of the scheme. This is a mechanism for deciding whether those benefits should be changed or, alternatively, whether contributions should be changed.

It has always been accepted that there are certain elements in the calculation involved in the cost-control mechanism that are regarded as member costs that will impact on the cost-control mechanism—but there are also these other elements in the calculation that are employer costs, which do not impact on the cost-control mechanism. The issue has been discussed, and there have been government reports on what counts as a member cost or an employer cost, but they have never considered the issue of the cost of a remedy incurred by the Government’s own error. It was the Government’s mistake to have age discrimination in this scheme and, to address the Government’s mistake, there has to be a remedy. That remedy is the subject of this Bill. Should the cost of that remedy be a cost for the Government, who created the problem in the first place, or a member cost? The Government argue that members are receiving additional benefits and so it is clearly a member cost.

This is an important issue and what I am arguing about now is not an ultimate answer—I have made my position clear; I think it should be an employer cost—but it is not an issue that should be addressed through directions; it should come before Parliament through regulations. Because of the nature of the regulations, they would probably be financial regulations and considered only by the House of Commons. That is effectively what I am arguing, and I have put down my amendment in order to raise this issue. To a certain extent, our deliberations here are not final, because this is the subject of extensive legal action. However, that is nothing to do with the argument today. The argument is technical; it is on the relatively narrow point of whether the cost of the remedy falls to be treated as an employer cost or as a member cost.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have not participated on this Bill before; indeed, I just want to pick up the point made by the noble Lord, Lord Davies, about the way that more and more government actions are taken by subordinate legislation. I chair the Secondary Legislation Scrutiny Committee, and we produced a report last week entitled Government by Diktat. My noble friend Lord Blencathra, who chairs the parallel committee, the Delegated Powers and Regulatory Reform Committee, produced another report called Democracy Denied?

We all know that secondary legislation it is not well scrutinised. It cannot be amended, and this House and indeed the other place are therefore reluctant to undertake what I call the nuclear option—we cannot amend a bit of it, so we have to reject the whole lot. The last time that happened there was a huge constitutional crisis, to which my noble friend Lord Strathclyde had to set up a committee to answer.

However, we have moved from that unsatisfactory position to one where we now have guidance. Guidance may or may not form part of the regulations; sometimes it says that the guidance “must have regard to” the regulations. What does that mean? Does it mean “I thought about it and I did not want to follow it”, or does it mean “The court will decide, and you had better have a jolly good reason for not complying with it”.

The point from the noble Lord, Lord Davies of Brixton, takes it further away from the control of this House. We have what is now tertiary legislation: directions and decisions made by bodies that are not answerable to Parliament but whose decisions and regulations are enforced and required to be obeyed by every single member of the population of this country. Whatever the rights and wrongs of the point from the noble Lord, Lord Davies—I am not in a position to judge—he raises a very important matter for the House, which needs to be debated and discussed. As we move to new ways of regulating and legislating, because our society is moving on faster than the rather stately pace of primary legislation, we need to find new and better ways of making sure that Parliament, as the legislature, is not subject to the creeping, increasing control of the Executive—the Government.

My committee and my noble friend Lord Blencathra’s committee are pretty convinced that the situation needs seriously addressing here—and of course in the other place, which must lead the way on this—if we are to make sure that the balance, which has shifted, is put back in the right place and in the right form. The speech by the noble Lord, Lord Davies of Brixton, underlines some of the dangers that we are facing by direction, which is not good enough because it does not come before your Lordships’ House or indeed the other place but will nevertheless have a very significant impact for our fellow citizens.

16:45

[Baroness Janke (LD)]

My Lords, I again thank the noble Lord, Lord Davies, for his explanation and for raising these issues, as he did in Committee. I listened again with interest to the noble Lord, Lord Hodgson, as he has intervened in two Bills on the issue of secondary legislation. I am sure that many Members of this House would support his view that there is inadequate scrutiny of secondary legislation and that the House’s powers are so severely curtailed that it requires us to ask whether we adequately exercise our scrutiny of subsequent legislation as we do with primary legislation.

As for the cost cap mechanism, I know that there was great criticism, both from the Public Accounts Committee and the National Audit Office, about the costs of the remedy and how they would be paid for by the members, whereas it was an error by government and it was certainly felt, as the noble Lord, Lord Davies, said, that it should be faced by government. However, the Government have certainly produced a more satisfactory cost cap mechanism, with a number of concessions relating to the future costs of the pensions. We welcome the new arrangements for payments for any breach of the cost cap or floor, which were to be paid for by the members of the new scheme, as we do the widening of the margin for material breach of the ceiling or floor. We also appreciated the new application of the economic test should the cost floor be breached. We feel that the Government have made some attempt to address criticisms of the cost cap mechanism and will follow with interest how that operates in future.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I again pay tribute to my noble friend Lord Davies for his contribution and for setting out the range of concerns surrounding the cost-control mechanism and the inclusion of the remedy as a member cost. I recognise that this question is subject to ongoing legal action and once again put on record that we welcome the provisions in Clause 80, although, as the Minister is only too aware, it does not deal with the wider question of plans for the cost-control mechanism.

Members of the House are not the first to raise questions over the Government’s plans. The cross-party Public Accounts Committee said:

“HM Treasury should have foreseen the age discrimination issue that gave rise to the 2018 McCloud judgment, and putting things right will take many decades to resolve. HM Treasury wants members to pay to put this right—at an estimated cost of £17 billion—despite this being its own mistake.”


That point was repeated by my noble friend Lord Davies and the noble Baroness, Lady Janke.

I look forward to the Minister’s response on this issue but, before I finish, I want to echo one specific question. Am I right that there will be a number of members who will not benefit from the remedy but will be impacted by it if it is included as a member cost?

I listened with interest to the noble Lord, Lord Hodgson of Astley Abbotts, on Parliament being subject to the creeping control of the Executive—I think that is the way he put it. He talked about examples of secondary legislation and indeed gave this as an example of tertiary legislation. I think a lot of us will have sympathy with what he said.

[Viscount Younger of Leckie (Con)]

My Lords, an amendment has been put forward to Clause 80 by the noble Lord, Lord Davies of Brixton, which concerns the employer cost cap. The noble Lord seeks to amend this clause to prevent the increase in value of schemes associated with the McCloud remedy being accounted for in the cost-control element of the 2016 valuations. I thank the noble Lord for bringing this to the attention of the House and am grateful to him for his prior engagement on the policy.

I can confirm that the Government have received pre-action protocol letters on behalf of some trade unions which have indicated that they may issue judicial review proceedings to challenge the Government’s decision to include the costs of remedy in the cost-control mechanism at the 2016 valuations. As the House will expect, and as the noble Lord, Lord Ponsonby, acknowledged, I cannot comment on the specifics of live or threatened litigation.

I acknowledge and appreciate the support the noble Baroness, Lady Janke, has given in general to the changes we have made to the cost-control mechanism—but there is more I want to say. I will talk through the general background, to reassure the noble Lord, Lord Davies, of the reasons for the Government’s decision. I will start by commenting on the policy rationale, starting with amending directions.

In Grand Committee, I brought to your Lordships’ attention that the Treasury had published amending directions on 7 October 2021 that will allow schemes to complete the cost-control element of the 2016 valuation process. These amending directions confirm that the increase in value of schemes associated with the McCloud remedy will be taken into account in the completion of the cost-control element of the 2016 valuations. The Government believe this is right, given that addressing the discrimination identified in the Court of Appeal’s judgment by giving members a choice of scheme benefits for the remedy period involves increasing the value of members’ pensions.

The cost-control mechanism was designed to assess costs arising from a change in value of schemes to members. Failure to capture the value of the remedy could have meant that members’ benefits may have changed going forwards, based on an incomplete and inaccurate assessment of the value of these pension schemes. This would represent an unacceptable risk to taxpayers, contrary to the objectives of the mechanism.

Turning to some specific detail on ceiling breaches, the Government have previously announced their intention to waive any ceiling breaches that arise from the 2016 valuations, and this is implemented by the current version of Clause 80. However, any floor breaches that occur will be honoured. This means that no member will see a reduction to their benefits as a result of the 2016 valuations. This decision, and the completion of the 2016 valuations, should provide certainty to scheme members over their benefits.

I will attempt at this stage to answer the point raised by my noble friend Lord Hodgson of Astley Abbotts and the noble Lord, Lord Ponsonby, about the use of directions. The Government acknowledge the key interest of the House in the scrutiny of secondary and tertiary legislation. The DPRRC considered this Bill and chose not to bring forward any comments for the attention of the House. The Government have powers under Section 12 of the PSPA 2013 to set out in Her Majesty’s Treasury’s directions what costs must be taken into account as part of the cost-control valuations. More broadly, I acknowledge the points my noble friend made; I have no doubt that Hansard will be read and I will say simply that his points are noted.

I will now say a few words about the amendment itself. The amendment seeks to amend the Treasury’s powers, set out in Section 12 of the Public Service Pensions Act 2013, to make directions which set the employer cost cap. Section 12 grants the Treasury a wide power to specify in directions which costs should be taken into account as part of the cost-control mechanism.

The amendment put forward by the noble Lord seeks to amend subsection (4) by omitting paragraph (c). I understand that the noble Lord’s intention is to remove the Treasury’s power to specify that the costs of remedy, or any other costs associated with the legacy schemes, should be accounted for in the mechanism.

This amendment may not have what I understand to be the noble Lord’s intended effect of preventing the increased value associated with the McCloud remedy from being included in the mechanism at the 2016 valuations. Subsection (4) sets out the type of costs that Treasury directions may specify for inclusion in the cost-control mechanism, but it is not intended to be an exhaustive list; rather, it provides some illustrative examples of how the wide power in subsection (3) may be exercised. I also note that the 2021 amending directions came into effect on 8 October 2021, as I mentioned earlier, under the existing powers. The noble Lord’s amendment as drafted would have no effect on the 2021 amending directions.

I want to attempt to answer some questions that were raised by the noble Lord, Lord Davies, supported, I think, by the noble Baroness, Lady Janke. There was some debate about why members are being made to pay for, as they put it, mistakes made by the Government. When the cost-control mechanism was established, it was agreed that it would consider only costs that affect the value of a scheme to members. Addressing the discrimination identified in the McCloud and Sargeant judgments by giving members a choice of scheme benefits for the remedy period involves increasing the value of schemes to members. The costs associated with this should therefore be taken into account as part of the cost-control element of the 2016 valuations process. However, any ceiling breaches that occur will be waived, no member will see a reduction in benefits as a result of the 2016 valuations, and any floor breaches that occur will be honoured.

The noble Lord, Lord Davies, asked when we will introduce amendments to reform the cost-control mechanism. I hope I can provide some reassurance by saying that the Government published our response to the consultation on the CCM on 4 October, we are currently working through our options and we will legislate for changes to the mechanism when parliamentary time allows. While a precise date has not been set—I am sorry I cannot give that date—the aim is to implement any changes in time for the 2020 valuations. As should now be clear, the Government have no intention of tabling an amendment in the House of Lords to implement these reforms. Instead, the package of amendments being introduced in this House are technical amendments that ensure the consistent application and legal operability of measures in the Bill.

I hope that, with these explanations, I have provided the noble Lord, Lord Davies, in particular, with some helpful reassurances on the policy rationale and the powers used, and I ask him to withdraw his amendment.

[Lord Davies of Brixton (Lab)]

My Lords, at the appropriate time I will indicate that I will withdraw the amendment. I am prepared to accept the advice that it does not actually achieve what I would like to achieve, and that the retrospective factor needs to be taken into account. But I would just like to highlight an issue mentioned by my noble friend Lord Ponsonby.

What the decision to make this a member cost means is that it will impact on those members who gain no benefit from the remedy. The remedy is not arbitrary, but there are broad patterns in who benefits from the remedy, and large numbers of members do not benefit from the remedy but will be affected by the inclusion of this as a member cost in the cost-control mechanism. The Government have suggested that they chose the four-year period within the cost-control mechanism for undertaking the calculation because they did not want to impact on future members of the scheme who gain no benefit from the remedy, but exactly the same problem applies to many current members of the scheme who will be active members during the relevant four-year period. To me, that sounds like an argument that the remedy should not be treated as a member cost, because of its inequitable impact.

I am very grateful to the noble Lord, Lord Hodgson, for his remarks. This is an issue that I have perhaps said more about than I originally intended, but I very much hope it will be taken seriously. What comes to me from it is that it is not easy to say what is or is not suitable to be dealt with through particular types of legislation. The issue is the impact it has, not its precise formulation—and making it a member cost has a substantial impact and so should get the appropriate level of consideration.

I note what the Minister said about the amendments to the cost-control mechanism and that he did not rule out the possibility that it would be added to this Bill during its Commons stages. I am a bit concerned about the idea of debating such significant changes in the context of the ping-pong process, so maybe he could give some sort of reassurance on that. But subject to those points, I beg leave to withdraw my amendment.

Amendment 114 withdrawn.

17:00

Amendments 115 to 117

Moved by

[Viscount Younger of Leckie]

115: Clause 80, page 56, line 3, at end insert—
“(1A) After subsection (1) insert—“(1A) Subsection (1) must be complied with before the end of the period of one year beginning with the day on which the scheme’s first valuation under section 11 is completed.””Member’s explanatory statement
This amendment imposes a time limit for scheme regulations to comply with section 12(1) of the Public Service Pension Schemes Act 2013 (which requires scheme regulations to set the employer cost cap for the scheme).

116: Clause 80, page 56, line 35, leave out “(5) and” and insert “(4A) to”
Member’s explanatory statement
This amendment is consequential on the new subsection inserted into this Clause after subsection (5).

117: Clause 80, page 56, line 35, at end insert—
“(4A) After subsection (1) insert—“(1A) Subsection (1) must be complied with before the end of the period of one year beginning with the day on which the scheme’s first valuation under section 11 is completed.””Member’s explanatory statement
This amendment imposes a time limit for scheme regulations to comply with section 12(1) of the Public Service Pension Schemes Act (Northern Ireland) 2014 (which requires scheme regulations to set the employer cost cap for the scheme).

Amendments 115 to 117 agreed.

Clause 86: Power to make provision in relation to certain fee-paid judges

Amendment 118

Moved by

[Viscount Younger of Leckie]

118: Clause 86, page 63, line 8, at end insert—
“(vi) section 57 (interest and process).”Member’s explanatory statement
This amendment ensures that regulations under Clause 86 are capable of including provision about interest.

Amendment 118 agreed.

Clause 88: Section 91 of the Pensions Act 1995

Amendment 119

Moved by

[Viscount Younger of Leckie]

119: Clause 88, page 65, line 3, at end insert—
“(3) Subsection (4) applies in relation to any reference in section 356 of the Armed Forces Act 2006 (avoidance of assignment of, or charge on, pay and pensions etc) to an assignment (or, in Scotland, assignation) of, or an agreement to assign, any relevant pay or pension (within the meaning of that section).(4) The reference does not include anything done under or by virtue of this Part of this Act.”Member’s explanatory statement
This amendment ensures that the restrictions in section 356 of the Armed Forces Act 2006 do not apply to the operation of Part 1 of the Bill.

Amendment 119 agreed.

Clause 90: Power to make consequential provision

Amendment 120

Moved by

[Viscount Younger of Leckie]

120: Clause 90, page 65, line 9, at end insert—
“(1A) Regulations under this section may make retrospective provision.”Member’s explanatory statement
This amendment ensures that the power to make consequential provision in this clause can be used to make provision that operates in relation to times before it is made.

Amendment 120 agreed.

Amendment 121

Moved by

[Baroness Janke]

121: After Clause 90, insert the following new Clause—
“Guidance
(1) Within six months of the day on which this Act is passed the Government must lay before Parliament a copy of draft guidance to members of pension schemes affected by this Part.(2) The purpose of the guidance under subsection (1) is to ensure members are able to make informed choices about their pensions.(3) The guidance may also outline plans by the Government to— (a) notify members if they are entitled to apply for compensation under the provisions of this Part, and provide them with the information necessary to do so, and(b) provide a free helpline or online service which members can use to receive further guidance about their pension.(4) Within six months of the day on which the guidance is published the Government must lay before Parliament a report on its effectiveness in achieving the purpose in subsection (2).”Member’s explanatory statement
This amendment would require the Government to publish guidance to members of pension schemes affected by this Part and allows for provision of a helpline or online service to offer further assistance. The amendment also ensures that the Government informs individuals if they are due compensation.

[Baroness Janke (LD)]

My Lords, as we have heard today and previously, the implementation of this Bill is likely to be extremely challenging, including, I would say, for scheme members. Millions of public sector workers will be affected by this scheme, and the process will involve unpicking, administering and communicating with members. I believe that members will need a lot of help to understand what is happening and to make good decisions. It seems to me essential that we should include a requirement on the Government to plan and resource support systems to enable members to make the best choices, and to provide the same to trustees and pension schemes.

Time is short, so I will not go into great detail, but I would like to hear how the Government plan to support and advise the millions of scheme members who will be faced with life-changing choices as a result of the changes that have come forward through this Bill.

[Lord Hope of Craighead (CB)]

My Lords, I support this amendment. I raised the issue in my speech at Second Reading because I look back with gratitude to the guidance I received shortly before I retired as to the choices I had to make under the judicial pension schemes. I think my position was relatively simple compared with the position we have now, because there were two clearly expressed schemes, the guidance I was given was intelligible and I was happy to follow it. Of course, I was aware—as I am sure everybody would be under this new arrangement—that the choice I made was going to be irrevocable, and I had to be very careful to make the correct choice.

I cannot claim to have studied the impact of this Bill—and, indeed, all the amendments that have just come to the House today—but my impression is that the situation is a good deal more complicated than the one I had to deal with when I was on the point of retirement. There is a great deal of force in this amendment, and I am delighted that it has been brought back on Report so that we can have a full response from the Minister.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I pay tribute to the noble Baroness, Lady Janke, for tabling and introducing this amendment, to which I have added my name. I also thank the noble and learned Lord, Lord Hope, for giving it his support.

This is the issue which I think is really at the centre of deliberations on this Bill and planning for the introduction of the remedy: how information and advice are going to be provided to members. In Committee, the Minister agreed with the importance of this issue. He said:

“The Government recognise the importance of providing members with clear, accessible and accurate information.”—[Official Report, 11/10/21; col. 357GC.]


The Bill provides for remedial statements to be provided to all members, which in itself is welcome. Before the Bill reaches the House of Commons, I ask the Minister to consider carefully what practical, accessible and time-sensitive help there will be for a member who is struggling to understand the statement and the complex background which precedes it. As I asked in Committee, if a person has no idea what their statement means, how their pension has been affected and when they are likely to be required to make a decision, who do they call? Where do they go for practical advice?

The amendment also raises the question of compensation. The Bill provides for applications to be made for compensation, but what information will be circulated to ensure that impacted members are aware that they are eligible to apply?

These are the questions we have to get right to ensure that members can confidently navigate the remedy, which, not to remind the Minister of this too often, was due to a government error. I hope that the Minister can give a commitment to take this away and to look at what more could be done in the Bill to ensure that members are given first-class accessible support in navigating this complex issue.

[Viscount Younger of Leckie (Con)]

My Lords, I am very pleased to be able to debate this important matter. As the noble and learned Lord, Lord Hope, and the noble Lord, Lord Ponsonby, said, these matters must be covered and the Government must be sure that enough information is given to pensioners to make the necessary decisions. I hope my remarks will give the reassurances on this.

As I set out in Grand Committee, providing sufficient guidance for members to make informed decisions regarding their pensions is, of course, of utmost importance. Indeed, this Bill implements a deferred choice for members so that they know what their pension options are at the time they make their decision. I acknowledge the point that the noble and learned Lord, Lord Hope, made about the complexity of this. I hope he will agree that we have taken this into account.

There are a number of problems with the approach proposed in the amendment, which would require the Government to publish guidance within six months of the Bill being passed. There are a significant number of schemes within the Bill’s scope, and scheme regulations will need to be developed, consulted on and implemented in each scheme. The Bill provides that the remedy must be implemented by October 2023, but that is just the beginning of the process. Decisions will be taken in relation to pensioner and deceased members from that time, but active and deferred members will be making their deferred choice over many years into the future. It would not be possible to produce guidance within six months in relation to regulations that may not have been made, nor useful to report on the effectiveness of such guidance before the remedy is implemented. Leaving aside the detail of the amendment, allow me to explain why the Government do not consider the amendment necessary.

On the question raised by the noble Lord, Lord Ponsonby, on the support that will be given to members, I assure him that members will be provided with information about their choice and will be able to understand the options available to them. In most cases it will be straightforward for a member to determine which benefits they wish to receive, but I also reassure noble Lords that schemes are developing tools to support members in planning for their retirement. Members will have access to up-to-date information about their benefits and be able to understand what each option will be worth at their planned retirement age.

Turning to the detail, as I set out in Grand Committee, the Bill already provides that scheme regulations must provide for each member to be provided with remediable service statements containing personalised information about the benefits available to them. That information will include details of the benefits currently available to them under the legacy scheme, and the benefits available to them if they elect to receive new scheme benefits or to opt for a period of opted-out service to be reinstated.

For active members, statements will be provided on an annual basis, enabling members to see how the two sets of benefits compare throughout their career. For deferred members, a one-off statement will be provided initially, with up to one further statement per year on request. For pensioner members, and in respect of deceased members, a one-off statement will be provided for such members or their relations to make an immediate choice.

However, remediable service statements are only part of the information and support that the schemes provide to members. The Public Service Pensions Act 2013 will continue to require schemes to provide members with information about their pension benefits, not just those relating to remediable service. In due course, members will also see information about their pensions through the pensions dashboard, which the House will be familiar with. Schemes already provide members with a wealth of guidance, support and information, and existing legislation already requires them to inform members about changes to pension schemes.

The noble Baroness makes an important point about members planning for retirement, and legacy and reformed schemes often have different retirement ages attached to them. The schemes have implemented significant changes before and are experience and adept at providing their members with support and guidance. The fact is that, across their careers, members will often have a range of different pension entitlements, with different rules and benefits payable at different ages. Therefore, these complexities are not unique to the remedy under the Bill, and the schemes already provide members with tools and support to help them to understand their options and plan for their retirement.

The Government Actuary’s Department is developing tools that will allow members to see exactly how their entitlements change, depending on when they access their benefits. Again, this is not specific to the remedy, but such tools will help members to understand how decisions about when to retire interact with their scheme benefits.

The amendment introduced would also require members to be notified if they are entitled to compensation, but it is already the Government’s intention that, in most cases, compensation will be automatic—for example, in relation to overpaid tax. In all cases, schemes will set out the process for claiming compensation in scheme regulations and inform members of this.

On tax guidance, schemes are already required to provide members, where appropriate, with the relevant information to complete their tax return, and this information will be updated and provided to the member, where their tax position changes. However, where there is an interaction with the tax system, the Government recognise that there will need to be further guidance to complement existing HMRC guidance and scheme processes that already provide the required information to complete a self-assessment return.

That was a rather long-winded response, but I hope that I have reassured the House once again that the Bill, existing legislation, the schemes’ existing processes and the Government’s intentions for implementing the remedy already combine to provide for all the information required for members to make the necessary informed decisions. With that, I ask the noble Baroness to withdraw her amendment.

[Baroness Janke (LD)]

My Lords, I thank all noble Lords who have contributed to the discussion on this amendment, particularly the noble Lord, Lord Ponsonby, and the noble and learned Lord, Lord Hope. I also thank the Minister for his clarification of the situation, as defined in the Bill.

Of course the remediable service statements will help, but the changes are taking place over such a short time and are on such a scale that it seems to me that there needs to be some form of helpline. I do not know whether the pensions dashboard could accommodate one; this might be something that the Government could look into. I ask that the implementation of these measures be closely monitored and that, should the workload and the volume of change give members a challenge in the choices that they have to make, support may perhaps be provided at a later stage. Having said that, I beg leave to withdraw the amendment.

Amendment 121 withdrawn.

Amendment 122 not moved.

Clause 92: Interpretation of Part

Amendments 123 to 125

Moved by

[Viscount Younger of Leckie]

123: Clause 92, page 66, line 6, at end insert—
““continuous period of service”, in relation to an employment or office, means a period of service in that employment or office that does not include a gap in service;” Member’s explanatory statement
This amendment ensures that “continuous period of service”, which is an expression which, elsewhere in pensions legislation, is defined to include non-continuous periods, is not interpreted in such a way in Part 1 of the Bill.

124: Clause 92, page 67, line 19, at end insert “, or
(b) amounts that a person is required under or by virtue of this Part to pay to the scheme by way of pension contributions;”Member’s explanatory statement
This amendment ensures that the definition of pension contributions is wide enough to cover contributions that are required to be paid under or by virtue of Part 1.

125: Clause 92, page 67, line 49, at end insert—
““voluntary contributions” means amounts that are paid to a pension scheme by a member of the scheme on a voluntary basis, in accordance with the scheme, for the purpose of securing additional benefits, or securing the earlier payment of benefits, under the scheme;”Member’s explanatory statement
This amendment generalises the definition of “voluntary contributions” previously contained in clauses 18 and 55 so that it applies throughout Part 1.

Amendments 123 to 125 agreed.

Clause 107: Appointment to sitting in retirement offices: further provision

Amendment 126

Moved by

[Lord Ponsonby of Shulbrede]

126: Clause 107, page 78, line 27, leave out “75” and insert “72”
Member’s explanatory statement
This would set the judicial retirement age to 72, rather than 75 as currently provided in this bill.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I will speak on the group of amendments consequential on Amendment 126. We have been talking about complex matters to do with public sector pensions, but this is a simple amendment that I will seek to explain to the House. I open by thanking the noble and learned Lord, Lord Etherton, and the noble and learned Baroness, Lady Hallett, for supporting this amendment. I look forward to the contribution later from the noble and learned Lord, Lord Etherton.

17:15

The Bill proposes harmonising the mandatory retirement age for all judicial officeholders at 75 years old. This group of amendments seeks to amend the mandatory retirement age to 72. I recognise that a lot has changed in the 27 years since the mandatory retirement age was set at 70. Life expectancy has risen, people are working longer and the mandatory retirement age has been abolished for most professions. None the less, the opposition Labour Party has reservations about raising the retirement age to 75 rather than 72.

When the Ministry of Justice consulted on this, it consulted on both 75 and 72 as possible retirement ages. While the overwhelming majority of respondents to the Government’s consultation, some 84%, supported raising the MRA, the Lord Chief Justice of England and Wales, the Lord Chief Justice of Northern Ireland, the President of the Supreme Court and the Lord President in Scotland were unanimous that it should be raised only to 72. In addition, the Magistrates’ Leadership Executive also favoured 72.

When the Minister comes to respond, I am sure he will quote other judicial associations that favour 75 over 72, as well as the results of the Ministry of Justice consultation, in which some 67% of the respondents favoured 75 over 72. I seek to persuade the House that the lower age, 72, is a more appropriate age and that 75 is a step too far. I believe it has distinct disadvantages. I base my argument on two principal reasons. The first is that it militates against judicial diversity. The second is that the mental decline of older members of the judiciary is a factor that should be borne in mind.

Simply put, raising the MRA to 75 will reduce the opportunities for candidates from BAME backgrounds. As we know, it is a scandal that only 1% of the judiciary are from a BAME background at the moment, and this has not changed in the last decade. The situation for magistrates is a bit better, but the same argument applies and there is still plenty of room for improvement among the magistracy as well.

Regarding mental decline, I remind the House that I sit as a magistrate. I regularly appraise colleagues, and this is a sensitive issue for me to address. It is my experience that some colleagues experience a mental decline. As a magistrate, it is a sensitive issue to appraise these colleagues. Of course, one has to be robust, but it is not unusual to find oneself appraising a colleague who has been a long-standing friend and having to have a frank discussion with them about some level of mental decline.

I will give a particular example from my own experience of sitting in the youth court in London. Almost always, when I have youths in front of me, I am considerably older than their grandparents. I see very serious crime in the youth courts, and a very high proportion of it is centred around communication apps for whatever the offence is—be it drugs, knives, or whatever. It is a reality that, although I am not nearly 70, I feel distant from the nature of the crimes; although I can understand their severity, the way that they are communicated among the youths is something that I have to work on to fully understand. But it is not only youth crime; it is also adult crime. I am also older than the grandparents of many of the adults that I see when I sit in magistrates’ courts in London.

I believe there is a limited administrative effort available for changing and updating the judiciary, and that effort should go into expanding the magistracy and increasing diversity. That limited administrative effort would be far better used in this way rather than in increasing the age of retirement to 75. I put forward 72 as a compromise, which has been consulted on, and I think it would be a step too far to go straight to 75 without taking into account the factors to which I have referred. I beg to move.

[Lord Etherton (CB)]

My Lords, I have joined in this amendment and I support it and the other amendments in the group, as I have previously with similar amendments by the noble Lord, Lord Ponsonby, because of the potentially severe adverse impact on diversity in our most senior courts, especially the Court of Appeal and the Supreme Court.

While all judges are critical to the administration of justice, the most senior courts are the courts that send the clearest message to our own nation and to other countries about whether we value diversity in those who administer the law. One must remember that the members of the most senior courts also provide the role models that are so important in encouraging and inspiring others. We do not have a diverse senior judiciary. Although some progress has been made, particularly in the last 10 years, with the recruitment of women, there is an unacceptable and embarrassing lack of people of colour who are senior judges.

There are no black and minority ethnic justices in the Supreme Court, and never have been. Just two of the 12 Supreme Court justices are women, one of whom is about to retire. Out of a maximum of 39 judges of the Court of Appeal, there is one judge from a minority ethnic background and only 10 women. Out of a maximum of 108 judges of the High Court, only five are from a minority ethnic background.

There can be no doubt that an increase in the age of retirement from 70 to 75 in one go will have a severely adverse effect on inclusion and diversity in our most senior courts. It will diminish, almost to a vanishing point, opportunities for appointment and advancement for a number of years. That is why, as the noble Lord, Lord Ponsonby, has pointed out, all the most senior judges were in favour of an increase in the judicial MRA to 72 rather than 75.

My noble and learned friend Lady Hallett, who spoke in Committee but is unable to be here today, has added her name to the amendment. She chaired the diversity committee of the Judges’ Council until 2019 and was a member of the judicial diversity forum. She said:

“It is impossible to improve the diversity of the Bench significantly … unless there is a constant flow of new recruits”.—[Official Report, 11/10/21; col. GC 374.]


That is equally true of advancement within the higher courts, from the High Court to the Court of Appeal and ultimately to the Supreme Court. As she said, raising the MRA of the judges is bound to restrict the number of vacant posts. The point, one would have thought, is self-evident, and it is borne out by the facts.

As I have said, one of the two women justices of the Supreme Court will shortly retire. If the Bill is enacted with an MRA of 75, it will be a number of years before any further vacancy will arise. There is no evidence of a pattern of early retirement of justices of the Supreme Court. Of the nine justices who have retired in the last five years, eight continued until the MRA. As I have said before during the passage of the Bill, so far as concerns the Court of Appeal, the average age of judges is just under 64. This means that, potentially, if the MRA is raised to 75, there will be very few vacancies for a further 11 years. Of the 13 judges who retired from the Court of Appeal in the past two years or so, over 70% stayed until the current MRA of 70. The best evidence that I have been able to obtain is that 90% of those due to retire in the next three years will go beyond 70 if permitted.

How, then, will it be possible for those minority ethnic judges in the High Court to progress to the Court of Appeal, let alone to the Supreme Court? The short answer is that it will be highly unlikely. The Government have said that raising the MRA to 75 will increase diversity and the attractiveness generally of applying for judicial office, because it will enable potential applicants to work for longer before seeking judicial appointment. In Committee, my noble and learned friend Lady Hallett said that she had spoken to literally hundreds of potential applicants, including women and BAME lawyers, over the years, and had never once heard an argument that the MRA of 70 was a factor in not applying for the Bench. The Government also say that, in their pre-legislative consultation, a majority of women and BAME groups opted for 75. I do not accept for one moment that, if such groups had been aware of the potentially adverse impact of the MRA on their appointment to the higher courts and on promotion within those courts, they would have endorsed 75.

It has been said by one noble Lord who supports the proposed rise in the MRA to 75 that this is a once in a generation opportunity. Again, I do not accept for a moment that, if and when an increase above 72 is thought desirable, the Government would not readily find a suitable legislative vehicle. In choosing to prolong to 75 the judicial careers of those currently in office, to the disadvantage of underrepresented groups, especially those who are black and from ethnic minorities, the Government have preferred exclusivity to inclusivity. This is out of touch with social attitudes within our wider society, and indeed those of other European countries and the United States. The judiciary is not excused from the call of so many for greater fairness, equality of opportunity and advancement for people of colour and other underrepresented groups within our society. The statutory public sector equality duty, which had its origins in legislation that followed the Stephen Lawrence inquiry, is now to be found in Section 149 of the Equality Act 2010.

Subject to certain exceptions, it requires public authorities, in the exercise of their functions, to have due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic—which includes race and sex—and persons who do not share it. The Act states that a person who is not a public authority as defined in the Act, but who nevertheless exercises public functions, must also have due regard to those matters.

Raising the MRA to 75 is inconsistent with such a duty, or at least its objective and underlying ethos. The House should not endanger its reputation by accepting the increase to 75. To do so would lay it open to the criticism that it is out of touch in preferring to prolong the status quo, rather than enhancing equality of opportunity and inclusivity; in preferring age and standing over fairness and greater participation in our judiciary of all groups within our society, whatever their background, ethnicity, sex or gender. I urge the House to endorse the amendment of the noble Lord, Lord Ponsonby.

17:30

[Lord Woolf (CB)]

My Lords, it is a pleasure to follow my noble and learned friend Lord Etherton, in this debate, but it was of great concern to hear what the noble Lord, Lord Ponsonby, said in his remarks. I am hugely impressed by the other names that have been supporting the suggestion that the age should be raised to 72 rather than 75, as the Government have proposed.

I have the advantage that the noble Lord, Lord Ponsonby, perhaps has not—not yet, at any rate—of being considerably older than 75. I address the House on the basis of what I have learned during the period that I have been a judge and a former judge. I am absolutely committed, as, I am sure, are colleagues, to the need to have a judiciary that is as diverse as possible, to persuade the public that they can continue to have the faith in the judiciary that they have had up to now, and if all the evidence is looked at, I am convinced that the fears so eloquently described by my noble and learned friend Lord Etherton and the noble Lord, Lord Ponsonby, are unrealistic. They leave out of account another very important issue which, I suggest, is realistic.

Unfortunately, the evidence is that the change made 27 years ago to reduce the age from 75 to 70 produced a situation that was very dangerous to the judiciary’s standing. The most senior posts—the posts that should be most active and attractive to applicants—were not being taken up. There was a risk that we did not have the quality of applicant for those posts, which I am sure both previous speakers would agree is critical. Above all, the very best people available should be appointed to the most senior judicial posts of this country.

We have, fortunately, international standing as a judiciary because of its quality. I venture to suggest that advancement applies not only to the more junior judiciary but, above all, to the most senior judges in this country, who, when they retire, are offered all sorts of opportunities to serve in a judicial capacity elsewhere, where they recognise the quality of our judiciary.

The most telling evidence on this important and difficult question is the fact that now, for 27 years, we have had the reduction in the retirement age of the judiciary not to 72 but to 70. Attention must be paid to all the views expressed by colleagues with whom I served and whom I hold in regard. Surely the diversity in our judiciary that they and I desire would have been fulfilled in those 27 years. The fact is that the lamentable situation today is that we still do not have sufficient numbers in the two grades of the judiciary which have been referred to in argument.

My conclusion is that there is a real difficulty in getting the very best judges by changing the age to 72. There is a danger which is supported by evidence. There is no evidence to suggest that anyone else would apply if the age up to which they could retire was 72. Unfortunately, the people we wish to apply who currently support our position in respect of diversity do not see it as their chosen career at that stage.

I say to the House that the Government are right. The evidence from their consultation supports what I say, and that is what we should do—not adopt a compromise that serves no particular purpose.

[Viscount Hailsham (Con)]

I declare an interest: I sit as a legal assessor for regulatory bodies, and I am very nearly 77—and therefore significantly older than the age of 72 proposed by the noble Lord, Lord Ponsonby. There are many other legal assessors of my sort of age sitting on regulatory authorities. I know full well that we are talking about judges, not legal assessors, but the principle is very much the same. If you were to say to legal assessors, “You cannot serve beyond 72”, you would lose an awful lot of quality which is now available to those regulatory authorities. I believe that the same is also true of the courts. I think judges should be able to sit until 75.

[Lord Brown of Eaton-under-Heywood (CB)]

My Lords, I join those who have indicated that they fully support Part 3 of the Bill and would raise the retiring age for judges—or rather return it to where it was 27 or 28 years ago—to 75, which it was for nine years of my own time on the Bench. I should declare that I too am well beyond the age when such as the noble Lord, Lord Ponsonby, might be having a discreet word with me.

I point out that this provision is fully supported by—as I understand it from Second Reading—the noble and learned Lord, Lord Mackay of Clashfern, who originally lowered the age to 70. He recognises that, all these years on, frankly, 75 year-olds now are a good deal younger than the 70 year-olds of those days past.

I suggest that the most important consideration is really that of judicial recruitment, which is still proving extremely difficult. The imperative surely is to get the most able people on to the Bench, whether they be men or women, whether they be gay, trans or straight, and whether they be young or old. The fact is that most cases are decided by a single judge. It is no good having the most wonderful judge trying the case in the next court if your judge is perhaps rather an indifferent one. So it is too with courts of three, five, seven or whatever.

Of course diversity is a highly desirable objective; obviously, public confidence in the justice system overall is enhanced if more people see themselves represented among the judiciary. In a three-judge, five-judge or seven-judge court, the wider the diversity of judges—including, of course, more women—the likelier the court is to bring to bear a wider experience and judgment on the questions. But I suggest that the argument in favour of 72 rather than 75 being supportive of diversity is, frankly, somewhat speculative; certainly, it is not sufficiently clear, I suggest, to justify sacrificing the goal of individual excellence on the altar of supposed greater diversity. Getting the best candidates to apply and appointing them on merit has to be the cardinal rule.

As to that, raising the MRA to 75 is, to my mind, assuredly going to assist in the recruitment of the ablest candidates, and I suggest that is so equally of women candidates as of male ones. First, it becomes more attractive because it is viable to take the job rather later in one’s career than at present. It gives candidates, male and female, longer to pursue whatever their initial career has been—it may have been in academe or in a range of areas on the borders of the law. It certainly gives practitioners a longer working life in which they can earn more than we all recognise they are going to be earning on the Bench.

Secondly, it gives candidates the option—it is not compulsory; they do not have to serve until 75—of being employed, useful and busy, as most of us would wish to be, for longer and later in their lives. Most of us do not actually want to be forced into compulsory retirement at 70—or, for that matter, at 72.

Thirdly, not only does a retirement age of 75 provide a yet better incentive than 72 for encouraging the best applicants to apply but it serves the public good. It retains supposedly skilled and experienced judges for that much longer. Despite what the noble Lord, Lord Ponsonby, suggests, it is surely not to be supposed that judges suffer a significant and noticeable failing in their abilities between the ages of 72 and 75 sufficient to draw the line at 72. It must therefore be in all our interests to keep these judges working, if they wish to, for that much longer.

Finally, I add as a footnote that it will save the taxpayer the need to pay these reluctantly retired judges a judicial pension for those three years for doing nothing.

17:45

[Lord Hope of Craighead (CB)]

My Lords, I too believe that the Government have made the right choice in going to 75 in one go, as my noble and learned friend Lord Etherton put it. We have to bear in mind that what is being suggested is a maximum; I think my noble and learned friend Lord Brown was making that point in passing in what he was saying a moment or two ago.

I am not sure that the examples that my noble and learned friend Lord Etherton gave of people going on until 70 is a very sound guide as to how people will behave if the age is raised to 75, for the very particular reason that a factor that someone has to bear in mind in choosing the age of retirement is whether he has served long enough to earn the full judicial pension. In my day, you had to serve for 15 years; now, you have to serve for 20. For those who have gone on to the Bench in their early 50s, the age of 70 does not give them long enough. When they reach the time when they have achieved that, they may well take the decision to go then, rather than going on for the extra few years, because they have actually earned their full pension. So we are, to a degree, in an area of speculation. We are having to consider human behaviour and how people will behave in view of the two choices of age that we are being given.

We are also contemplating human behaviour in the problem of diversity. I pay tribute to what my noble and learned friend Lord Etherton was saying about the need to increase diversity at all levels on the Bench. I had the responsibility for a while, as Deputy President of the Supreme Court, of being on a commission considering applicants for the position of justice. One of the issues that concerned us at the time was the lack of diversity in the applicants coming before us—a point that I think has been hinted at by my noble and learned friend Lord Brown of Eaton-under-Heywood. Again, we are trying to speculate about human behaviour. There is an immense amount to be said for the diversity element, but I do not think one can be sure that choosing 75 instead of 72 is going to be as damaging as has been suggested.

As for the in-one-go point, I think my noble and learned friend Lord Etherton was referring to me when he mentioned someone who said at Second Reading that the opportunity to legislate on this issue comes quite seldom. I would be concerned, if we were to settle on 72 this time, as to when one would ever get back to the age of 75. As it happens, the Bill has enormous importance behind it because of the need to deal with pensions, which is a pressing issue. It has been possible to bring in the retirement age element and other parts of the Bill because the Bill is already there and the issue fits quite neatly with its broad aim and subject matter. How soon could we be sure that we could ever get back to this issue? For that reason too, the in-one-go point has a lot to commend it.

There is even more to be said for the points made by my noble and learned friends and the point that we are dealing here with an element of speculation, since we are setting a maximum age, not a compulsory one, and it will have the benefits that have been referred to. I believe the Government have made absolutely the right choice here.

[Lord Mackay of Clashfern (Con)]

My Lords, I am in the rather unusual position of having brought the judicial retirement age down, all those years ago, to 70 from 75. Your Lordships will remember that 75 was a fairly recent innovation because, originally, judges were appointed for life, and if they did not care for resignation, that sometimes meant fairly long periods in office.

I am very given to wishing for diversity on the Bench, and I realise what the authorities responsible for appointments have done over the past few years. I do not think the noble Lord, Lord Ponsonby, or the noble and learned Lord, Lord Etherton, can be sure that if they get 72 instead of 75 there will be an increase in diversity on the Bench. I had a great deal of experience—it is a long time ago—of trying to work with the ethnic minorities to improve their chances of getting to the top. Indeed, the death of one of those appointments—Mr Kadri, the first Muslim Silk who originated from Pakistan—was reported just the other day. During my time in office, I struggled to bring up the standards of ethnic minorities at the Bar because I felt that was the way to build up a chance of diversity. One of the difficulties in doing that was getting the arrangements needed for that purpose. I was of the view, and am still, that the best chance for ethnic minorities is not Chambers that are entirely of an ethnic minority but diverse Chambers with people from different backgrounds. That has happened to a considerable extent in recent times. It has produced some ethnic-minority members on the Bench, although nothing like as many as I would have liked.

I am convinced that the situation is very different now from what it was 27 years ago, as the noble Lord, Lord Ponsonby, said. Just after the Supreme Court was set up, the noble and learned Lord, Lord Irvine of Lairg, and I wrote to the then Lord Chancellor suggesting that the age limit for Supreme Court judges should be raised to 75 from 70 to accommodate for a reasonable length of time some of those who were there and had the potential to be very good examples of service in the Supreme Court. I am not sure that diversity has necessarily increased very much since then. It is perhaps worth my commenting that the President of the Supreme Court and the Deputy President of the Supreme Court are from Scotland. That is a very important move, although it is not in the way of diversity. It shows that those making the appointments are doing their best to secure the best quality they can at this time. However, it is important to do everything we can to raise the quality of those who are thinking of going to the Bench.

I do not know on what basis the noble Lord, Lord Ponsonby, and the noble and learned Lord, Lord Etherton, whose experience and position is a matter of great importance so far as I am concerned, know that if this is left at 72 there will be greater diversity than now. The people making appointments are as keen on diversity as we are, but they find it difficult in the context in which they are working to bring it forward. I do not believe that it is at all likely that 72 will be more fruitful in that respect than 75. There is no doubt in my mind that going to 75 will increase the possibility of people in senior positions at the Bar taking the appointment. That is one of the things that I realised. The reason is simply that, as has been pointed out, the pension is important in these situations. People who are at the top of the profession are rather unwilling to take a judicial appointment unless they have a pension that encourages them to leave the Bar, with what they are making. I support this move to 75 very strongly, although I know it reverses what I did all those years ago.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, it is an enormous privilege and pleasure to be able to follow the noble and learned Lord, Lord Mackay, because when he was Lord Chancellor he swore me in as a judge of the High Court. At that time, the retirement age had been reduced to 70. Before turning to this particular amendment, because it is of particular relevance, I say how much I welcome and appreciate what the Government have done in bringing forward this Bill and clearing the terrible problem related to judicial pensions. Of all the research that was done during the time that I was the senior judge, it was clear that the biggest impediment to recruitment was what had happened on pensions, so I thank the Government with all my heart for putting this matter right.

I could not possibly begin to say that a retirement age of 75 was in ordinary circumstances the right age. It would be a difficult proposition to make to this House in any event, but I will be of that age next year and I still sit in a judicial capacity. However, that is not the issue. The issue is, starkly, diversity. I do not think that this House can run away from that, for reasons that I will endeavour to explain. The senior leadership judges whom the noble and learned Lord, Lord Etherton, has described all support moving only to 72 because of the imperative of diversity.

When I was Lord Chief Justice, I was under a statutory duty to promote diversity. Working hard with Lady Justice Hallett, as she then was—she is now the noble and learned Baroness, Lady Hallett—we did it not because we were under a statutory duty but because we believed it was imperative for the judiciary to increase its diversity. The figures are telling. In 2005, there were two female members of the Court of Appeal. By 2015, there were eight, but—the noble and learned Lord, Lord Etherton, gave the figures—there are only 10 now. In the Supreme Court, there was one, then there were three, and now there are two, so the battle for diversity has yet to be won, particularly as regards our ethnic communities.

Why do I have this belief in diversity? There are three reasons. First, it is critical to public confidence in the judiciary—without which, the whole of society suffers. Secondly, diversity represents the fundamental principles of justice: equality of opportunity and fairness. Thirdly, unless we fully embrace the principles of diversity, for the whole of our society, we will not recruit and bring into the judiciary the broad background that we need—possibly not to decide the most intellectually important cases but to bring justice that is appreciated to everyone.

18:00

The noble and learned Lord, Lord Etherton, gave the figures with great clarity. He explained the simple mathematics of the position—and mathematics is often the easiest way of seeing the difficulty. As the noble and learned Baroness, Lady Hallett, put it, unless there are vacancies at the most senior levels of the judiciary, we will not be able to improve on the figures that have been given. It seems to me that the critical question for this House is the extent to which we wish to give a message that diversity matters to our society, and then we can move in due course to 75.

My first point is that I do not understand the Government’s answer to this question. When I was Lord Chief Justice, there were a number of Lord Chancellors. Each and every one of them believed in diversity; some, such as the present Foreign Secretary, perhaps more than others. Why the change? Why is it not seen as an overriding objective to make the most senior levels of the judiciary more diverse?

Secondly, it seems to me that we have not only to look at the figures but, more importantly, to ask ourselves about the symbolism. Why are we setting an older retirement age, which—I regret to say—will largely benefit men to the detriment of advancing ethnic minorities and women? That is a question that each and every one of us must be prepared to answer publicly.

Thirdly, this is not a question of the net benefit of keeping a number of very senior judges. When I was Lord Chief Justice, it became a common experience that people would calculate their prospects of moving to the Court of Appeal or the Supreme Court. If the retirement age is raised to 75 up to five years before there is much prospect of movement for some, we will lose judges, and among them we may well lose are those who presently represent diversity.

I strongly support the speeches made by the noble and learned Lord, Lord Etherton, and the noble Lord, Lord Ponsonby; it seems to me that this is an amendment that we must carry. We must give the right message to the public as a whole, and we must do so from our hearts. I believe we should do as the noble and learned Baroness, Lady Hallett, has done: we must do all we can to promote diversity in our judiciary and thus increase public confidence in it. I warmly support the amendment.

[Baroness Janke (LD)]

My Lords, the debate this afternoon has been passionate and enlightening. Here is a quote from Second Reading:

“I think that everybody in this House would say that it is important that our senior judges in the Court of Appeal and the Supreme Court reflect the society that we live in if they are to be respected and seen as part of our current era. At the moment, they do not.”—[Official Report, 7/9/21; col. 792.]


It is also a great pity that the Government have not conducted impact assessments with benchmarking of different ages, but they have not. In the absence of impact assessments, I look to the arguments that we have heard. The point has been admirably made: unless there are vacancies, there will not be opportunities for diversity.

We have heard arguments as to why we should not do this; for example—an argument we often hear when there is talk of promoting diversity—that somehow quality will suffer. I have heard those arguments for the last 40 years. Whether scientists, engineers or Members of Parliament, we now see women operating in spheres that were occupied only by men in the past, with no diminution in quality at all. In fact, the contrary has been the case.

I very much respect what was said by the noble and learned Lord, Lord Mackay, with his experience and knowledge. He mentioned context, however, and, the more we listen to this debate, the more we realise that it is the context that has to change. The present context does not promote diversity at all; I would venture to suggest that, to create greater diversity, the circumstances need to change. This amendment seems to me to promote the kind of change that we need.

We heard from the noble and learned Lord, Lord Etherton, that the position of women has improved and continues to improve slowly, but—to use his words—that the embarrassing position as far as minority ethnic judges is concerned is something we all ought to be ashamed of. The cause of diversity is one that we in this House, as well as people from all walks of life, welcome. Everybody here wants to see a more diverse judiciary. Whatever our own situation, and whether or not we believe, as some in this Chamber clearly do, that somehow the courts will not attract the very best people to be judges, the cause of diversity is absolutely self-explanatory and vital if the people of the country are to be able to respect those in eminent positions. From what I have heard today and in Committee, I would say that the cause of diversity is best served by this amendment. We on this side will support it.

[Viscount Younger of Leckie (Con)]

My Lords, I start by thanking all noble Lords for their contributions during this lively debate. I also thank the noble Lord, Lord Ponsonby, and the noble and learned Lord, Lord Etherton, for the consideration they have both given to this issue, not just today but throughout passage of the Bill. I have listened with care to both sides of the argument put forward today. However, I would like to use this opportunity to set out in full why—in a robust response following detailed public consultation—the Government continue to believe that 75 is the right judicial mandatory retirement age.

All four nations of the UK conducted public consultations on this important question and, following careful analysis of responses, the decision taken by each Government was to increase the mandatory retirement age to 75. I appreciate the support of noble Lords today, from my noble friend Lord Hailsham, to the noble and learned Lords, Lord Woolf, Lord Brown and Lord Hope, and my noble and learned friend Lord Mackay.

I remind the House of some of the data emerging from the UK Government’s consultation. The vast majority of respondents—84%—believed that the mandatory retirement age should be increased, with 67% indicating that a retirement age of 75 was better, all things considered. Notably, 74% of respondents believed that such a change would not damage confidence in our world-class judiciary—something raised by one or two noble Lords today.

On a point raised by the noble and learned Lords, Lord Etherton and Lord Thomas, as to why we appeared to be going against the views of the senior judicial responses to the consultation, we recognise the varied opinions on the appropriate retirement age. However, I assure noble Lords that this decision was taken after careful consideration of all responses including those of the senior judiciary. Some 67% of respondents to the consultation on this matter favoured increasing the age to 75, as I have said. We recognise the concerns raised by the senior judiciary over impacts on judicial diversity, which I shall address later in my remarks. However, on balance, we believe that raising the retirement age to 75 sets the right balance.

It is clear that we agree on one point: that the mandatory retirement age should be increased. The question being debated here is to what age. Here is a point raised by the noble and learned Lord, Lord Hope. If the retirement age is to be increased as this Bill intends, it should be a meaningful increase, which will bring a clear and tangible benefit to the resourcing of our courts, not just a minor raise by two years to 72—a decision which I suspect will not put this issue to bed and will mean that we find ourselves discussing it again in the not-too-distant future, as has been said.

This leads me to an important point on life expectancy. Since the current mandatory retirement age was set in 1993, life expectancy is longer, and social attitudes to working in later life have changed significantly. An age of 75 much better reflects this change. That was a point that the noble and learned Lord, Lord Brown, alluded to in his powerful remarks. Indeed, as I have noted previously, many Members of this House over the age of 75 are among its most knowledgeable, productive and vibrant. I look around now—not wishing to bring any individual Peer to the attention of the House—but I hope that my point is well made.

I stress that the mandatory retirement age is a maximum, not a minimum. Judges will by no means be forced to continue working to 75. The key objective here is additional flexibility, both for officeholders themselves as well as for the resourcing of courts and tribunals. Increasing the mandatory retirement age to 75 maximises this flexibility. Indeed, we already have some officeholders sitting up to the age 75 who play a key role in the administration of justice.

I must also note that, based on the evidence available, it is not clear that all, or even most, judges would choose to continue working to 75. With some trepidation, I do not entirely agree with the statistics put forward by the noble and learned Lord, Lord Etherton, on judiciary retirement. The average retirement age of salaried judges is, I understand, about 67. Over the last five years senior judges—that is, judges of the High Court and above—with a mandatory retirement age of 70, have also on average retired at 67. Evidence therefore suggests that the majority of judges do not continue working till their mandatory retirement age. As I have stated, the objective of this measure is additional flexibility to support the resourcing of courts and tribunals.

I understand that the intended effect of this amendment is to raise the mandatory retirement age to 72 rather than to 75, as has been made clear. However, I must make it clear that this presents a number of consequential issues for other related provisions in the Bill. I note that the amendments do not include changes to paragraph 25(2)(b) of Schedule 1, which repealed the powers to provide for extensions up to 75. In the consultation, only 10% of respondents believed that, if the mandatory retirement age were 72, extensions past the mandatory retirement age should not remain. The amendments as drafted would leave us with a lower retirement age but without retaining these provisions for extensions which are currently in place. Additionally, those “sitting in retirement” can currently continue to decide cases up to the age of 75. The effect of the amendment to Clause 107 would require those sitting in retirement to also retire at the age of 72. This would reduce the resourcing flexibility that “sitting in retirement” arrangements provide.

I also highlight that the amendments do not appear to take account of Part 2 of Schedule 1 to the Bill, which allows for the reinstatement of retired magistrates who are younger than the mandatory retirement age, where there is a business need. This would provide necessary additional capacity in the magistrates’ and family courts to meet forecast case volumes and provide timely access to justice as the courts recover from the pandemic. The Government’s modelling indicates a pool of about 4,000 retired magistrates would be eligible to be considered for reinstatement with a retirement age of 75, but only around 1,300 would be eligible to be considered with retirement at 72. In addition, an age of 72 would provide a much shorter timeframe over which those magistrates reinstated could sit, which means that, when the time and investment necessary to reappoint and retrain is taken into account, the number who would be able to make a meaningful contribution would be smaller still. Therefore, the amendments as tabled result in a hard cut-off at age 72, and with less flexibility than now.

18:15

I turn to one of the main thrusts of this debate, which is judicial diversity. I have listened very carefully to the arguments put forward by the noble Lord, Lord Ponsonby, and the noble and learned Lords, Lord Etherton and Lord Thomas. I reaffirm the Government’s unwavering commitment to judicial diversity, including recruitment north of the border. We aspire to a judiciary that better reflects the society that it serves. I understand that the Judicial Diversity Forum’s updated action plan is to be published this winter and will include more detail about the important actions that the Ministry of Justice and other members of the forum will be taking to continue to drive recruitment and improvements in diversity.

While we must strive to do more in this space, progress continues to be made in increasing judicial diversity. Some 48% of new court and tribunal judges in 2020-21 were women, and 14% were from a black, Asian, or minority ethnic background. Furthermore, women judges made up 48%, and black, Asian, or minority ethnic judges made up 12% of all judges promoted in that period. In years to come, I have no doubt that many of these fine putative legal minds will climb to the highest levels of our judiciary, and a later mandatory retirement age will give them more time to do so.

I also make clear the projected diversity impact of a higher mandatory retirement, and how this differs depending on the age. If the mandatory retirement age is increased from 70 to 72, this is projected to result in a 1% decrease in diversity growth in the medium to long term, considering both gender and ethnic diversity together. This is a crucial argument, and it is where I do not agree with the noble and learned Lord, Lord Etherton, who called the impact severely adverse. If the MRA is increased from 70 to 75, this is projected to result in a 1% to 3% decrease. While there is a difference in impact, as I acknowledge, I hope that it makes clear just how marginal this would be: between a 0% and 2% difference in diversity impact when considering 72 against 75, a point raised by my noble and learned friend Lord Mackay.

I also stress that this is not a decrease in diversity per se, but in the rate of diversity improvement compared to maintaining the current retirement age. We expect that judicial diversity will continue to improve, because we intend to continue recruiting around 1,000 judges per year in the coming years. I accept that, if current officeholders opt to remain until 75, the progress in increasing diversity of the senior judiciary would be affected in the short term. Requiring senior judges to retire earlier than 75 could result in more vacancies sooner. However, the path to a more representative senior judiciary is long, as the candidate pool in the short to medium term is also not particularly diverse. This is emblematic of why projected differences in overall judicial diversity are marginal even with a higher mandatory retirement age. But I again stress the important actions that the Ministry of Justice and all members of the Judicial Diversity Forum are, and will be, taking to improve the diversity of senior lawyers and the judiciary.

While judicial diversity is an extremely important issue which we must continue to take steps to address, the capacity of our justice system is also critical. A mandatory retirement age of 75 gives us scope to significantly boost the capacity of our judiciary with only a very marginal overall diversity impact. A mandatory retirement age of 75 brings significantly greater operational advantages than 72. As of April 2021, we have over 12,000 highly valued magistrates dispensing justice in our courts, which is simply not enough to meet demands. An age of 75 would retain around 2,000 additional magistrates, more than double the amount retained by a mandatory retirement age of 72, at a time when we have a significant shortfall.

I want to spend a short amount of time explaining what we are doing to improve the diversity of the magistracy, because we are delivering a new recruitment programme to recruit a greater number of magistrates from diverse backgrounds. We are planning to recruit 1,500 per annum overall. In addition, we are gathering qualitative research through surveys and discussions to identify the barriers that we absolutely need to eliminate when recruiting magistrates to recruit a more diverse pool. Using these findings, we will invest in a targeted marketing strategy, directed at underrepresented groups in local areas, to improve diversity. It is important that we do not just rely on magistrates sitting longer. That is why the Government are delivering a new recruitment programme for the magistracy.

I end by noting that legislative consent Motions are being processed in Scotland and Wales, while one has been passed in Northern Ireland, to agree to the UK Government changing the mandatory retirement age to 75. I must stress how important it is, in the Government’s view, that we retain a consistent mandatory retirement age for judicial officeholders in all four nations. These amendments could seriously jeopardise that imperative. With that, I hope that noble Lords will not press their amendments.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, let me provide some context to the figures that the noble Viscount has given. He said that there are 12,000 magistrates in England and Wales today, but when I became a magistrate 14 years ago there were 30,000, so there has been a managed decline of the magistracy. I support, of course, the recruitment programme, which is targeting and, as he said, marketing to try to get greater diversity through that process.

The simple point is that you cannot run away from diversity. There is an absolute imperative to increase diversity within the whole of the judiciary. It is not good enough just to wring your hands and say, “It’s all very difficult”. It has been very difficult for decades and the situation has not improved. The maths is very simple; we heard the maths from the noble and learned Lord, Lord Etherton, who also quoted the noble and learned Baroness, Lady Hallett, who is in a particular position to know. There need to be vacancies for people to progress through the system. It is a simple argument, which I do not think a number of noble Lords fully took on board.

When I introduced this debate, I made a simple example of my role as a youth magistrate and how I felt that I was moving further and further away from the youths I was judging. I gave the example that I am older than the grandfathers of nearly all the youths I am judging. Not one noble and learned Lord addressed that point. They addressed points about the difficulties of recruitment and the ins and outs of the pension scheme, but not the central issue that I tried to raise about the judiciary being further away from the people who they are judging. I argue that we need to have some level of connection to reach fair judgments.

My amendment is a modest compromise. It says that 75 is too far and that 72 is a better age to see how it goes. I acknowledge that people are working and living longer—I made those points when I introduced the amendment—but I say to the noble Viscount and to a number of contributors to this important debate that I am not convinced. I wish to test the opinion of the House.

18:23

Division 1

Ayes: 147

---

Labour: 78
Liberal Democrat: 49
Crossbench: 13
Independent: 6
Green Party: 1

Noes: 211

---

Conservative: 176
Crossbench: 20
Labour: 4
Democratic Unionist Party: 4
Independent: 3
Ulster Unionist Party: 2
Bishops: 1
Plaid Cymru: 1

18:36

Schedule 1: Retirement date for holders of judicial offices etc

Amendments 127 to 202 not moved.

Amendments 203 and 204

Moved by

[Viscount Younger of Leckie]

203: Schedule 1, page 93, line 27, leave out “court” and insert “courts or the family court”
Member’s explanatory statement
This amendment enables the Lord Chancellor to remove a person from the supplemental list on a temporary basis for the purpose of facilitating the disposal of business in the family court as well as in the magistrates’ courts.

204: Schedule 1, page 93, line 34, leave out “court” and insert “courts or the family court”
Member’s explanatory statement
This amendment enables the Lord Chancellor to extend the period during which a person is removed from the supplemental list if the Lord Chancellor is satisfied that the extension would be expedient as a temporary measure in order to facilitate the disposal of business in the family court as well as in the magistrates’ courts.

Amendments 203 and 204 agreed.

[The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)]

We shall now have a short interval for a change of personnel before we move on to the next business.