Judicial Pensions (Amendment) Regulations 2024

Monday 11th November 2024 Grand Committee

Considered in Grand Committee

17:09

Moved by

[Lord Ponsonby of Shulbrede]

That the Grand Committee do consider the Judicial Pensions (Amendment) Regulations 2024.

[The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Ponsonby of Shulbrede) (Lab)]

My Lords, the statutory instrument before us today amends a number of the judicial pensions regulations, specifically: the Judicial Pensions (Fee-Paid Judges) Regulations 2017, referred to as the FPJPS regulations; the Judicial Pensions (Fee-Paid Judges) (Amendment) Regulations 2023, referred to as the 2023 FPJPS amendments; the Judicial Pensions Regulations 2022, referred to as the JPS 2022 regulations; the Judicial Pensions Regulations 2015, referred to as the JPS 2015 regulations; and the Public Service Pensions Act 2013 (Judicial Offices) Order 2015, referred to as the judicial offices order.

The judicial pension scheme is made up of a number of historical pension schemes. Since April 2022, the only scheme open for pension benefit accruals is the judicial pension scheme 2022. All preceding judicial pension schemes closed to further accruals on 31 March 2022, but these older schemes are still relevant as the majority of judges have service extending across multiple schemes.

The FPJPS regulations established the fee-paid judicial pension scheme. The JPS 2015 and JPS 2022 regulations established, respectively, the judicial pension scheme 2015 and the judicial pension scheme 2022. These schemes regulate the pensions of the fee-paid and salaried judiciary. These amendments will make a range of changes to improve and, where necessary, correct the running of these schemes in line with statutory requirements and actuarial advice. The last time we debated the judicial pension scheme, which was when I was in opposition, I said that I suspected it would not be the last time we would have such amendments; it appears I was right. There may be more amendments to come.

By their nature, these regulations are highly technical. In essence, these amendments to the existing schemes do the following. First, they provide for an employer cost cap in the judicial pension scheme 2022, following the completion of the scheme valuation in February 2024. Secondly, they add further eligible judicial offices to their appropriate pension scheme, where that eligibility has now been determined. Thirdly, they extend a number of deadlines for member elections under the fee-paid judicial scheme. Fourthly, they extend powers to reconcile amounts that were paid to judges whose pre-2000 service must now be taken into account as a result of the O’Brien 2 litigation, in respect of those new, pre-2000 entitlements, with their formal entitlements for that period.

A number of technical changes are required to facilitate the smooth running of the pension schemes, which I shall take in turn. The first is the employer cost cap. The inclusion of a cost control mechanism, or CCM, in the JPS 2022 regulations is a statutory requirement under the Public Sector Pensions Act 2013 for all public sector pension schemes. These amendments add the CCM to the JPS 2022 regulations. This must be included by 6 February 2025, one year on from the first actuarial valuation of the scheme by the Government Actuary’s Department.

The CCM is designed to ensure a fair balance of risk with regard to the cost of providing public service defined benefit schemes between members of those schemes and the Exchequer. This is partly achieved through the setting of an employer cost cap. If, when the overall CCM is tested, costs have increased or decreased by more than a specified percentage of the pensionable pay compared with the employer cost cap, members’ benefits and/or contributions in the relevant scheme are adjusted to bring costs back to target. This could mean, for example, that a member’s contribution rate could go up or down. However, the mechanism is designed with the intention that benefit rectification would be triggered only by “extraordinary, unpredictable events”.

Moving on to additional offices, JPS 2015 came into effect on 1 April 2015 and was open to eligible fee-paid and salaried judges with service between 1 April 2015 and 31 March 2022. JPS 2022 came into effect on 1 April 2022, when all eligible judges moved into this scheme in respect of accruals for future service. JPS 2022 covers eligible service in fee-paid and salaried offices from 1 April 2022. These amendments add a number of judicial offices into FPJPS, JPS 2015 and JPS 2022 where their eligibility for a judicial pension has been determined. This will allow these members to accrue pensions in the correct scheme for their office and, where applicable, to have access to retrospective entitlements in JPS 2015 and JPS 2022. This will allow members with service in these offices to access the benefits they are entitled to and make the correct contributions to the scheme.

17:15

Moving on to extended deadlines, a number of deadlines are being extended for member elections to FPJPS. FPJPS provides a judicial pension for judges with eligible fee-paid service. Following the O’Brien 2 judgment, FPJPS was amended by way of the 2023 FPJPS amendments to take into account eligible service prior to 7 April 2000, in order to mirror pension entitlements for the salaried judiciary. The 2023 FPJPS amendments set deadlines by which eligible members must make an election concerning their FPJPS pension provisions and purchase additional pension benefits that they were entitled to following the O’Brien 2 judgment. We are now extending these deadlines to allow more time for the scheme to engage with eligible members, in order to give members the time and information needed to make an informed choice.

In advance of the FPJPS regulations being made, the Ministry of Justice made interim payments in lieu of pension—known as PILs—to eligible judges, in order to provide an approximation of the remedy they would likely receive once the legislation was in place and operationalised. The regulations included a power to “reconcile” these payments with the actual amounts of pension owing. These powers allowed the MoJ, once the regulations were in force, either to recover any excess PILs payments made or to pay out further pension where PILs had been underpaid.

Following the O’Brien 2 litigation, this power was extended by the 2023 FPJPS amendments to permit the MoJ to reconcile PILs paid to judges in relation to their pre-2000 service where those amounts were paid before 1 April 2023—the date on which the 2023 FPJPS amendments came into force. However, exact pension entitlements could not be calculated immediately from 1 April 2023 due to operational constraints, so payments continued to be made on an approximated basis after that date, albeit that they were paid as pension rather than PILs. Therefore, these amendment regulations extend the reconciliation powers to permit the MoJ to continue to reconcile the approximated pension payments made to judges from 1 April 2023 in respect of their pre-2000 service.

Finally, a number of further technical amendments to FPJPS and JPS 2022 correct typographical errors and cross-references to ensure that the regulations reflect the policy intention. Additionally, the FPJPS regulations included a voluntary fee-paid judicial added benefits scheme when it came into force; this was amended in 2023 to reflect the O’Brien 2 remedy. The scheme is highly technical and, in operationalising it, we have identified the need to amend it again in order to simplify its structure, to make some clarifications and corrections, and to include updated actuarial factors for determining cost and conversion values for added units of benefit. This will allow the scheme to run more smoothly and better reflect the original intention to mirror the provisions available to relevant salaried comparators.

I turn to the consultation that we have undertaken on these amendments to the judicial pension scheme. The Ministry of Justice opened a consultation on these proposals on 19 February, which closed on 14 April. There were six responses, of a technical nature, with no objections to the content of the amendments. On 14 October, the government response was published, setting out that no further changes to the amendments were needed to address the responses.

Officials at the devolved Administrations in Scotland, Northern Ireland and Wales have been kept apprised of the development of the amendment regulations, in particular in relation to the offices whose jurisdictions are in those countries, and their views have been reflected in the drafting. The Secretary of State for Scotland was also consulted. Subsequent to the consultation, the MoJ identified the need for additional amendments to extend the reconciliation power and further extend certain deadlines. The MoJ engaged the senior judiciary on these matters, which also resulted in no objections to the amendments.

In conclusion, I assure the Committee that the amendments set out in this statutory instrument are necessary to improve and correct the running of the judicial pension schemes, meet our statutory duty to insert a cost cap mechanism and, together with other measures on judicial pay and pensions, help to ensure that we can continue to support our outstanding independent judiciary. I beg to move.

[Lord Marks of Henley-on-Thames (LD)]

My Lords, first, I congratulate the noble Lord on his concise and detailed opening on a complicated set of regulations. I note that the regulations were introduced by the last Government and have hardly undergone any significant change since their introduction, so it is unsurprising that they are likely to be relatively uncontroversial. There will certainly be no opposition from the Liberal Democrats to these proposals.

The most significant of what are largely tidying-up amendments are those that bring into line with other fee-paid judges a number of tribunal judges and chairs. That is completely in line with the view that we all take—that tribunal judges and chairs are a very important part of the working judiciary and that the tribunal system does the whole work extremely well. It is right that the pension arrangements for paid judges should be aligned.

The other significant point is that the pension arrangements for part-time service in the light of the O’Brien judgment are now going to be tidied up so that some of the anomalies that arose from that judgment have been eliminated, so far as they can be, although it is a difficult area—and I appreciate that the regulations have to reflect that difficulty.

I noted from the Explanatory Memorandum and the Minister’s opening that there was a consultation, which attracted no fewer than six responses, none of them critical—and, I take it, all of them raising questions that have been satisfactorily answered. In view of that, I have no further questions for the Minister on this SI.

[Lord Wolfson of Tredegar (Con)]

I am not sure whether I need to declare a formal interest, as my wife sits as a fee-paid tribunal judge but, for the avoidance of any doubt, I do. I suspect that the impact of this regulation on her will be de minimis and no doubt happen in many years’ time.

That said, I can be brief because the Minister has been so comprehensive. As we heard from the noble Lord, Lord Marks of Henley-on-Thames, these regulations emanate from the previous Government; this is not an area where, historically, there has been political controversy. Indeed, as the Minister said, we debated similar regulations when our roles were reversed. I echo his comment to me that this is probably not the last time we will come back to debate and discuss these pension regulations, because they are complex. Part of the reason for that is the history and the litigation that has arisen, but the one thing we share around the Committee is the importance of having an attractive pension scheme so that we attract the finest candidates to our judiciary—and retain them. Indeed, one of the things we did in the previous Government was to increase the retirement age to 75. The Minister referred to our outstanding and independent judiciary, and we absolutely endorse those two adjectives; it is outstanding, and it is totally independent.

I also endorse the point made by the noble Lord, Lord Marks of Henley-on-Thames: the fact that we are widening some of these pension schemes to include more tribunal judges is testament to the fact that so much of the important work of our judiciary is done by tribunal judges, both full-time and part-time—I think fee-paid is the proper term. Day in, day out, tribunals up and down the country deal with really important issues for people on the ground, so to speak. They are often unsung, and far from the legal journals and law reports, but they deal with important legal issues on a daily basis.

I have only one question for the Minister, which I ask as a matter of interest rather than in any controversial way. I note that, by these regulations, we are extending the time to enable judges to make choices between the pre-1995 and post-1995 schemes. I am interested in why we are extending time for that and why this particular period of extension has been chosen.

Other than that, I am tempted—as I think they are still debating the Budget in the Chamber—to point out that, although it is important to have attractive and gold-plated pensions in the public sector, that does not mean that we should raid private pensions in the private sector. If I say any more on that I will take this debate to places where it ought not to go, so I will stop there and make it unequivocally clear that we on these Benches are also firmly in favour of these regulations. I thank the Minister for introducing and explaining them so clearly.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I thank both noble Lords for their support for these regulations. I will first address the question that the noble Lord, Lord Wolfson, asked about why the deadlines for member elections are being extended. The answer is that, for members to be able to make an informed decision on their member elections, we need to provide detailed, illustrative information to affected members, which requires significant data inputs from our suppliers. The extension to 31 March 2027 will ensure that we can get this information to members with enough time for them to make a decision. I think that answers the noble Lord’s question.

I wish to say how much I agree with the noble Lord, Lord Marks, about the wider judicial family, and the importance of tribunal chairs and judges feeling part of that family and of their pensions recognising that fact. Of course, the part-timers—or fee-paid judges—fall into that category as well. That point was well worth reinforcing.

I also reinforce the point that the noble Lord, Lord Wolfson, made in his conclusion, about how our judiciary is a huge asset and resource for our country. It is indeed outstanding and independent—those are appropriate adjectives. There is never any question about its independence or ability. I have never, in either my business life or my political life, heard anyone seriously question judges’ independence or capability, if I may put it like that. We need to value that fact, and do so by making good but fair pension schemes. I hope these regulations are a small step in the road to maintaining that.

Motion agreed.

Committee adjourned at 5.30 pm.