Public Service Pensions and Judicial Offices Bill [HL]

Baroness Janke Excerpts

2nd reading
Tuesday 7th September 2021 Lords Chamber

[Baroness Janke (LD)]

My Lords, I too thank the Minister for his clear and succinct introduction. As he said, this legislation is necessary to remedy the effects of the McCloud judgment relating to the Public Service Pensions Act 2013. I rise to highlight some of our concerns in a number of areas.

The first is discrimination. In introducing the remedy, the Government must be certain that new measures will not produce further discrimination, such as placing a greater burden on newer or younger members of the scheme or reducing the right of part-time workers to make up their pensions by working for longer. This particularly affects women who have worked part-time due to family or caring responsibilities. In their responses to the consultations, some have described, with particular reference to the police and the benefits of the legacy schemes, how the Bill must pay particular attention to discrimination to avoid further long and drawn-out legal cases.

Also, as the noble Lord, Lord Davies, said, it is very important that the changes be just, and there must be trust in government to protect citizens. Promises and commitments already entered into by government must be addressed and cannot simply be brushed aside as being too costly. It will be of great importance to many members that promises made by the Government are honoured. Equally, commitments made by the Government, as agreed in the cost mechanism, have not been acted upon—as, again, the noble Lord, Lord Davies, said—following the 2016 valuation, which should have benefited members. It is worth noting here the comments of the Public Accounts Committee:

“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 it being its mistake.”


The National Audit Office said in March 2021:

“Employee representatives told us that the review of the mechanism”


because of what has happened at the first valuation

“undermined trust between employees and the Government”.

The recommendation of the House of Commons report on public service pensions stated:

“HM Treasury must prioritise work to quickly resolve the challenges presented by the McCloud judgment and cost control mechanism, in order to give certainty to scheme members and employers, and rebuild the trust lost”.


Other concerns relate to the treatment of disbenefits to members of current legacy schemes. These must be fully evaluated before March 2022, when they enter the career-related schemes and the legacy schemes are closed. There are significant differences between the new schemes and legacy schemes such as the police pension—again, that is specifically referred to—which is based on years of service rather than pensionable age. Both these schemes are seen by members as being based on promises made by the Government to the service. Retirement in the career-related scheme is at 60, but as police pensions are based on years of service, members may wish to retire at an earlier age. If they do this under the career average scheme, which allows retirement at 55, they could lose up to 25% of their pension, which is a very significant issue. I am sure that this will be considered in more detail in Committee. There are similar structural issues for fire and rescue services, which were highlighted by the LGA. I would like the Minister to take note of an anomaly in Clause 29 and consider an amendment to recognise the special arrangements of the service where the employer is also the scheme manager.

The complexity of the current position with regard to public service pensions legacy schemes, given the Government’s intention that all be included in CARE schemes by March 2022, gives rise to a lot of practical problems, and I would like to understand how the Government intend to deal with them. It will be extremely important that the proposals in the Bill are workable. It is easy to say that members get to retirement and make whichever choice is best for them, but in some cases, they may have rights built up that fall due at different ages—some at 60, some at 65. So, if there is not a single retirement age, when do they have to make the choice? In some cases, the higher pension at retirement may be under one set of rules, but as retirement continues it may turn out that the other set of rules would have given a bigger total pension. What happens then?

The Government have accepted that people with really complex tax issues can have financial advice, but what about the millions of public sector workers who will have to make these choices? Where is the help and guidance coming from for them? What about financial planning between now and retirement? Presumably, any statement will show rights based on the assumptions of the old scheme, even though some people will opt for the new scheme. Will they have access to both numbers when they are planning and will the pensions dashboard show both numbers? It is going to be an extreme challenge for schemes to unpick, administer and communicate, and members are going to need a lot of help to understand what is happening. What plans do the Government have to resource support systems and enable members to make the best choices? Support for trustees of pensions schemes will also be needed.

The Bill deals with the consequences of government failure to foresee the age discrimination issue which gave rise to the McCloud judgment. The Bill will determine the future means of many public service employees. The Minister and the noble Lord, Lord Davies, said that many complex and difficult matters need to be resolved if members are to have confidence in the competence, integrity and political will of the Government to get it right.

Public Service Pensions and Judicial Offices Bill

Baroness Janke Excerpts

Committee stage
Monday 11th October 2021 Grand Committee

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I rise to speak to Amendments 1 to 3 in my name. They are probing amendments to draw out some further detail, and I thank the noble Baroness, Lady Janke, for adding her name to them. I put on record my thanks to the Police Superintendents’ Association for raising its members’ concerns with us.

Recurring themes will emerge in our deliberations on this Bill—particularly questions of oversight, of the details and the actual mechanics of when and how the remedy is to be delivered and of how that will impact on members. With these amendments, we are trying to flesh that out.

I recognise that the Bill is essentially an enabling Bill, and it provides powers for schemes to do the detailed work required by the remedy. Therefore, it is one piece of a very complex picture. The Committee will particularly benefit from the expertise of some Members here today, and we hope to probe some key questions and add to the understanding of what impacted scheme members can expect.

Amendments 1 to 3 are simple probing amendments to Clause 16. Currently, the clause provides that a scheme “may” make provision to waive or reduce a scheme’s members’ liability. These amendments would change that word to “must”. The Explanatory Notes state:

“Clause 16 provides that scheme regulations for a legacy scheme may make provision whereby a liability on an individual to repay overpaid benefits … or to pay an amount in respect of underpaid contributions … is reduced or waived.”


In simpler terms, due to the changes and choices that the Bill provides for, some members may end up owing their scheme funds due to their having underpaid contributions or having been overpaid pension benefits.

Clause 16 provides that schemes have the power to waive or reduce those costs for people in certain circumstances, but the Bill does not provide any detail of what those circumstances will be. The Explanatory Notes give the following example:

“where a pensioner member has been overpaid their pension benefit and reimbursing the … scheme would cause hardship, the pension scheme could write off part of the liability.”

That is a welcome example, but it appears only in the Explanatory Notes. There is no level of detail reflecting that, or indeed any of the possible circumstances, in the Bill itself.

So, I have number of questions for the Minister. Can he provide more detail on the circumstances in which the Government would expect relief to be provided under this clause? Secondly, has the department estimated how many people may be affected in this way? Thirdly, I know the Minister will tell us that the Government’s aim is to provide the schemes with discretion to support their members, but should not every scheme at least be required to set up provisions to provide relief where necessary? Furthermore, on the question of when a waiver or reduction would be necessary, are there situations in which the Government would expect every scheme to provide relief, such as where financial hardship is caused? In this case, would it not be appropriate to include those details in the Bill?

Another question concerns Clause 24, which provides that the powers under this clause must be exercised in accordance with Treasury directions. So, the Treasury intends to provide some directions to the schemes on these issues, but outside the Bill and away from parliamentary scrutiny. What plans do the Government have to consult on the directions and the circumstances this clause may be applied to, so that the schemes reflect the actual situations experienced by members?

I know that the Minister is only too aware of this issue and, in many ways, we keep coming back to it. This is a complex Bill and we have a number of hours to look into that complexity. Clause 16 recognises that the impacts may need to be mitigated. What we are seeking is clarity on the protection and assistance that will be available. I look forward to the Minister’s explanation. I beg to move.

[Baroness Janke (LD)]

I signed Amendments 1, 2 and 3 and support the reasons laid out for us today by the noble Lord, Lord Ponsonby. It is be important that all members of the scheme understand how this system will work. As we have heard, it is a complex Bill that will affect many people, so I agree that an estimate of the number affected would be helpful. The transparency and consistency of the scheme need to be clear, and I hope the Minister will be able to provide that clarity. I also agree that it would be helpful to have the Treasury directions on the face of the Bill, rather than outside it, so that there are no misunderstandings and the people affected by this provision understand clearly how it will work for them.

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The concern that Amendments 20, 30 and 31 are all pointing out goes back to the role of the Bill as enabling legislation. The Bill establishes a wide range of regulation-making powers to allow schemes to take actions to support the discrimination remedy. Significant details are then to be written in at a later stage through not only regulations but Treasury directions. While regulations are the appropriate vehicle for much of the detail, the question is a simple one: how do we action the legislation to allow the remedy to be established while also allowing oversight and proper engagement on the next steps which are to come? How do we ensure that this time the Treasury is “listening”, as the Public Accounts Committee puts it? The Police Superintendents’ Association has raised particular concerns about how its members will be consulted on the finer details of the provisions that are made through Treasury directions. It would be helpful to hear from the Minister what commitment he can give to ongoing consultation with members, including on provisions made through directions rather than legislation, and what long-term provisions there will be for oversight of the Bill and the regulations made under it, particularly on such key issues as compensation arrangements.

[Baroness Janke (LD)]

I, too, would like to speak to the amendments in my name. I do not have a great deal to add to what the noble Lord, Lord Ponsonby, has said other than to say that I think that this is a particularly important part of the Bill. We have heard from many people who are affected by this Bill about the need for confidence in the measures contained in it and for trust in light of what happened to lead to the need for this legislation. These amendments are to probe what the Government are planning in terms of a compensation scheme and, as has already been said, the right of appeal and members’ rights as to how their representatives may be involved in any compensation scheme. The requirement for consultation clearly goes without saying, and the Government need to do much more work on this part of the Bill to ensure that members have confidence in it.

The noble Lord, Lord Davies, referred to promises having been made but not being honoured and the fact that many outstanding issues still await resolution. I hope that the Minister can clarify what the Government intend and that the proper process will fill members with confidence and ensure much greater trust than has been the case so far.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Lord, Lord Davies, once again and indeed the noble Lord, Lord Ponsonby, and the noble Baroness, Lady Janke, for their valuable contributions and remarks. Given that the noble Baroness is right that this is an important part of the Bill, I wish to give a pretty full response, so I hope the Committee will indulge me as I want to go through in some detail the issues that have been raised and, of course, answer as many questions as I can.

I start by saying, just as a point of agreement, that this group of amendments seeks to ensure that members are correctly compensated for any detriment that they have suffered as a result of the discrimination that has arisen. I reassure this Committee that this is certainly a shared objective.

The noble Lord, Lord Davies, put forward three amendments to Clause 21. It may be helpful if I set out the intended purpose of this clause. It confers power on scheme managers to make payments in relation to compensatable losses. This is compensation in relation to losses incurred as a result of the discrimination, the remedy provided by the Bill, or in respect of certain tax losses. The clause allows for matters that are not directly remedied by the Bill or scheme regulations to be put right.

Amendment 14 would remove the requirement that losses may be compensated only where they are of a description specified in Treasury directions. However, in the Government’s response to the consultation on remedying the discrimination, we set out that some member representatives and employers considered that there would be a need for consistent treatment across and within schemes.

The Treasury directions are one way in which we intend to ensure that such consistency is achieved. The proposed amendment would remove the central consistency that we have committed to provide and would instead require scheme managers to determine all claims in an exercise of their own discretion alone, which could lead to inconsistent and potentially unequal treatment across schemes. I am sure this Committee would agree that we do not want that. That approach would give rise to the concerns that respondents to the consultation raised. We do not consider that is a responsible or appropriate approach. The Government have committed to providing a consistent and full remedy to members and we believe that will be best achieved by the current drafting.

Amendment 15—which was spoken to eloquently by the noble Lords, Lord Davies and Lord Ponsonby—seeks to compensate members for the closure of the legacy pension schemes and for any contingent decisions taken where a member had a period of remediable service that was under a new scheme. Paragraphs (b) and (c) of the amendment from the noble Lord, Lord Davies, in particular, closely relate to an ongoing judicial review challenge before the courts—which the noble Lord alluded to—and it would be inappropriate to discuss in detail. However, the effect of the amendments would be to provide the substantive remedy that the claimants are seeking in the judicial review claim. It would compensate members who were in scope of transitional protection but have not yet retired and will now be in scope of the prospective measures set out in Clauses 76 and 77 of this Bill. Providing compensation in this circumstance would therefore be contrary to the intention of those clauses that all members are to be 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 case in 2018 that the transitional protections offered under the Public Service Pensions Act 2013 amounted to unlawful discrimination. Accordingly, offering compensation to transitionally protected members would effectively undermine the Court of Appeal judgment by perpetuating this unlawful discrimination through different means. The effect would be that instead of allowing transitionally protected members to continue in service in legacy schemes, they would now be receiving the benefit of financial compensation. Non-transitionally protected members would not receive such compensation, so there would still be an unfair difference in treatment.

I will pick up on a point made by the noble Lord, Lord Davies, to try to be helpful concerning police stakeholders. The Government really do understand the concern raised by stakeholders regarding the difference in when members can access their full pension in the 1987 and 2015 police pension schemes. I can reassure noble Lords that the Home Office is engaging with police stakeholders on these matters. However, it is the Government’s view that it will be appropriate for future pension accrual to occur in a scheme with different retirement provisions, for the reasons set out by the noble Lord, Lord Hutton, in his report. As set out in the consultation response regarding this specific issue, it is right that the Government be able to make changes when they judge it necessary to do so. The commission’s original objectives and recommendations, leading to the 2015 reforms and reform schemes, still hold. The Government therefore consider that this is not appropriate and that it is crucial to the effectiveness of the remedy that the discrimination is not perpetuated.

Returning to paragraph (a) of the amendment, this clause already makes provision for losses that arose as a result of the discrimination; that is covered by the first condition, contained in subsection (4). I hope that I can therefore reassure the noble Lord, Lord Davies, that the amendment is not needed.

The noble Lord has also put forward four amendments to Clause 23. Amendments 16 and 17 would require, rather than allow, scheme regulations to make provision under which interest is required to be calculated and paid on amounts owed to or by members under or by virtue of the Bill, and about the process by which amounts and any interest on them are to be paid; I know that this matter cropped up in debate slightly earlier. Where sums are owed to schemes or members, for example relating to contributions or benefits, Clause 23 provides powers for scheme regulations to make provision about the payment of interest on those amounts. Interest will be added to amounts payable by schemes or members. The Government consider that the addition of interest is necessary to ensure fairness between members. For example, where members owe contributions, their comparators in the scheme will have been paying the correct level of contributions throughout, so would not have had the benefit of the additional money over time. Interest will be paid on benefits or contributions owed to members to reflect that the payments relate to earlier periods of time.

Clause 23 also provides that scheme regulations may make provision about the process by which amounts due to and from schemes are to be paid. This includes matters such as providing for when amounts are to be paid, allowing for those to be paid by instalments if appropriate, netting off amounts owed by a person against amounts owed to a person, and conferring rights of appeal against a decision taken under the regulations. The amendments would require scheme regulations to make such provision. However, the Government do not consider that imposing a duty on schemes to make such regulations would be appropriate. Doing so could lead to vexatious claims that schemes have not made regulations to deal with obscure situations that could arise. Rather, the Government consider that granting schemes a broad power, exercisable in accordance with Treasury directions, is the right approach to ensure that schemes can make all the necessary and appropriate provision in scheme regulations, while providing sufficient flexibility to account for the differences in the public service pension schemes that I referred to earlier.

The noble Lord’s third amendment, Amendment 18, would remove provision for schemes to make a payment only on the making of an application. This provision is there for the benefit of members: for example, members may not wish to receive amounts that they are owed. This could arise if they are an active or deferred member and intend to choose reformed scheme benefits upon retirement in order to avoid double corrections, as envisaged by Clause 16(8).

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[Lord Ponsonby of Shulbrede (Lab)]

My Lords, this group deals with a straightforward issue, which should not need much explanation, but should be at the heart of our deliberations on this Bill. I raised it at Second Reading and it was also raised powerfully by the noble Baroness, Lady Janke, with whom I share this group. I will speak to her amendment within the group.

In recommendations made in 2011, predating the pensions reforms that gave rise to the discrimination that the Bill seeks to address, the Public Accounts Committee recommended that

“HM Treasury should work with employers and pension schemes to ensure that clear and relevant information is provided to employees on the value of their pensions.”

In June this year, a decade later, the PAC reported that it was “disappointed” by the “limited progress” that had been made and that

“more needs to be done to improve employees’ understanding.”

The crucial relevance to the Bill today is captured—one could almost say understatedly—by the PAC when it says:

“The problem has been exacerbated with further complexities being introduced as a result of government’s response to the McCloud judgment.”


I do not need to put too fine a point on how complex the remedy and the legislation before us today are. We are the people attempting to scrutinise it, and we are only too aware of these complexities. Imagine the impact of this sudden deluge of remedies, liabilities, regulations, protections and decisions on those of our public service workers who are building up their pension in their career, perhaps as a teacher, a firefighter or a civil servant. It must be an utmost priority that scheme members are given accessible, timely, easy-to-understand and easy-to-access information to help them to understand what has happened and what it means for them.

Clause 26 makes provision for remediable service statements—essentially, annual benefits statements for members that would include information on the benefits available under the legacy scheme, information on the impact that making certain choices under the Bill would have on those benefits and a description of how and when a choice can be made. This is the primary mechanism in the Bill for providing information to members on how the remedy could have an impact on them.

Amendments 21 to 23 in my name would require the information in those statements to be provided in “clear and accessible language”. Their aim is to probe whether the content included in the statements will be plain-language, practical descriptions of what these options mean for the value of a person’s pension, or whether members will find themselves faced with a complex financial statement that is too difficult to use.

Amendment 25 raises a specific concern around tax returns: ensuring that members have what they need to fill out a self-assessment tax return. For example, members of affected schemes will have to work out tax relief on contributions, as well as their annual allowance and other values. Will a remediable service statement include the necessary information to allow a member to navigate the tax impacts of the changes to their pension status? If not, will financial advice be available to ensure that they can accurately fill out a self-assessment statement, taking the remedy into account?

Finally, Amendment 24 in my name and Amendment 33 in the name of the noble Baroness, Lady Janke, deal with the key to this issue: what guidance, help or services the Government plan to provide to help impacted members to understand what this means for them, and how members will be signposted to them. 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? I look forward to the Minister’s reply.

[Baroness Janke (LD)]

My Lords, I very much agree with the points made by the noble Lord, Lord Ponsonby. There is a huge challenge here for the Government. When you think of how many individuals with individual futures will be affected by this Bill, it is something that really needs deep thought in terms of what kinds of guidance and support will be provided, how they will be resourced and how the Government will signpost them.

It does not sound too challenging to say that members get to retirement then make whichever choice is best for them, but actually lots of complicated decisions requiring support and high levels of knowledge need to be taken. For example, in some cases, members may have built up rights that fall due at different ages. If there is no single retirement age, when do they have to make their choice? In some cases, a higher pension may be owed at the time under one set of rules but, as retirement continues, it may turn out that the other set of rules would have given a bigger total pension. Again, help needs to be given.

The Government have already accepted that people with complex tax issues can have financial advice, but what about the millions of public sector workers who will have to make these choices? On financial planning, we encourage people to make plans for their pensions and explore how they are going to live post retirement, but how easy will it be to make a proper plan with the new system being put in place? For example, will the pensions dashboard provide the information they need?

It is an enormous task for schemes to unpick, administer and communicate. Members are going to need a lot of help to understand what is happening, so it would be very helpful to know what the Government intend to provide in the way of support systems to enable members to make the best choices, and to trustees of the pension schemes as well. We welcome how this is to be resourced and I hope that we will have a clear and detailed statement on supporting elements for the implementation of the scheme. I look forward to the Minister’s response.

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Moved by

[Baroness Janke]

32: After Clause 90, insert the following new Clause—
“Review of the impact of this Act on fairness
(1) Within six months of the day on which this Act is passed the Secretary of State must lay before Parliament a review of the impact of this Act on fairness to members in receipt of pensions to which this Part applies.(2) The review under subsection (1) must make reference to the impact of the provisions on women in particular.(3) The review under subsection (1) must make recommendations as to whether further legislation should be brought forward by the Government to try and close the public service pensions gap between men and women.”Member’s explanatory statement
This amendment would require the Government to report on the impact of this Part on fairness, especially with regards to women.

[Baroness Janke (LD)]

My Lords, this amendment calls for a review of the fairness and just treatment of some of the issues that have already been raised, particularly with regard to disbenefits to members of current schemes. We have heard of those today; the pensions trap was already described in detail by the noble Lords, Lord Davies and Lord Ponsonby. Women police officers are also being unfairly treated in the Bill, in that those who have taken time off for caring responsibilities can make up the time they had lost under the police pension scheme, but under the new scheme, which is based on age, they have to work longer. That is an example of some of the issues caused by the Bill that may not be addressed by some of the amendments we have put forward.

Gender in pensions is not a new issue. The gender pension gap is a serious matter; the average pension pot for a woman aged 65 is one-fifth of that for a 65 year-old man. Women receive £29,000 less state pension than men, over 20 years. This deficit is set to continue, closing by only 3% by 2060. This amendment seeks to highlight the importance of this issue and the need for urgent measures to address it, so we are raising specific disbenefits in the new scheme, particularly in relation to women and the gender pension gap. I look forward to the Minister’s response.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I will speak briefly on this matter, but I acknowledge its importance and I thank the noble Baroness, Lady Janke, for raising it. The amendment touches on a number of key issues that we have debated today: the long-term oversight of the Bill and its impact; fairness, particularly the consequences for women and part-time workers; and the need for decent, accessible information for workers on the value of their pensions. We have seen what happens when the effects of pensions legislation are not fully taken into account or monitored. It results in the Bill in front of us and all the related complex consequences we see here today.

On the gender pension gap, during the course of today, we raised specific concerns about the different impact some changes will have on women, who are more likely to have been part-time workers or to have taken time out of their careers for caring responsibilities, leaving them with interrupted contributions and interrupted years of service. The noble Baroness made this point all too clearly. What is particularly shocking about the gender pension gap is how little it is commonly talked about and recognised. I hope that this Committee stage will slightly raise the profile of the issue, but I know that the noble Baroness, Lady Janke, as well as my noble friend Lady Drake and others, has consistently raised it across the House and brought it to the Government’s attention at every opportunity.

The cross-party Women and Work All-Party Group has called on the Government to “take urgent action” to close the gap which, as it points out, has persistently

“remained at about 40% for the last five years”.

The recommendations of the all-party group include that:

“The Government should publish guidance directed at women on how to adequately prepare for retirement and encourage employers to calculate their gender pension contributions gap in order to compare this to their gender pay gap data.”


There is cross-party understanding of this issue and cross-party support for it has been raised in other forums. What is needed to tackle it adequately is political will. I look forward to the Minister’s reply.

[Viscount Younger of Leckie (Con)]

This was a much shorter debate. I begin by thanking the noble Baroness, Lady Janke, and the noble Lord, Lord Ponsonby, for the points they made and for raising this important matter. As I touched on earlier in debate, of course I agree that fairness and equal treatment lie at the heart of the Bill—that is, fairness between lower and higher earners and fairness for the taxpayer—as well as the future sustainability and affordability of public service pensions.

Let me go further. The Government agree with the importance of assessing the impact of the Bill on members of the public service pension schemes with protected characteristics, including—importantly—women. This is why the Government sought responses to the consultation on equalities impacts and conducted a full equalities impact assessment of the Bill, which was published alongside its introduction. In addition, when making the necessary changes to their scheme rules to deliver remedy, schemes will carry out any appropriate analysis of equality impacts for their specific schemes alongside consultations on these changes, in compliance with the public sector equality duty contained in Section 149 of the Equality Act 2010.

The Government’s equalities analysis highlights a number of important features of this Bill, which aims to ensure equal treatment between men and women. I note the points made by the noble Lord, Lord Ponsonby. For example, with regard to the main public service schemes, requiring members in scope of remedy to choose their benefits long before retirement could disadvantage women, who may be more likely to take a career break or work part time between implementation of the remedy and their retirement. By allowing this choice to be made at retirement, the deferred choice underpin avoids additional complexity for these groups by allowing them to make their decision in full knowledge of how part-time work or career breaks have affected their earnings and pension accrual. Similarly, by making remedy available to individuals who were in service on or before 31 March 2012 but subsequently left and rejoined, provided that their break in service was less than five years, the Bill ensures parity for groups that may have been more likely to take career breaks—for example, to care for young children or elderly relatives.

The Bill also provides that, from 1 April 2022, all public service workers who remain in service will do so as members of the reformed schemes, which provide career average—so-called CARE—benefits. CARE schemes offer fairer outcomes to those who experience lower salary progression over the course of their careers. As such, statistically, a higher proportion of women and those with other protected characteristics are likely to be better off under CARE schemes, which are broadly more beneficial for lower and some middle earners. The Bill also provides that men and women in the same scheme and of the same date of birth will have the same scheme normal pension age—NPA—under their particular reformed scheme design, and the same NPA for their legacy scheme benefits.

More broadly, the Government recognise the importance of public service pensions in addressing the pensions gap in society between men and women. As women make up roughly 65% of active public service pension scheme members, the provision of generous defined benefit public service pensions actively serves to reduce that gap. Nevertheless, the Government recognise that, in the public sector, differences remain in average annual pension payments and accrued pensions; this was alluded to by the noble Baroness, Lady Janke. However, these reflect past differences in earnings over members’ careers rather than differences in their pension terms.

Therefore, the best way to combat differences in pensions accrual is to tackle the gender pay gap and promote equal opportunities for career progression, regardless of sex or other protected characteristics. The Government are taking active measures on both, including through mandatory gender pay gap reporting. As a result, the gender pay gap continues to be lower in the public sector than the private sector; I have some statistics that I could give to the Committee. As already mentioned, these differences should reduce over time as a result of the move to a CARE benefit design, which all members will accrue from 2022 and which will lead to fairer outcomes for those with lower pay progression.

Given the extensive analysis that has already been conducted and published, as well as the further analysis that schemes will carry out, the Government do not think that a further review is required at this stage. I understand the sentiments behind the amendment but we do not agree that it is necessary. I therefore ask the noble Baroness to withdraw her amendment.

[Baroness Janke (LD)]

I thank the Minister for his response and take his assurances very seriously. Again, this is perhaps something we need to reflect on as it affects society as a whole. I believe we should use every occasion we can to address these fundamental unfairnesses. Having said that, I am sure we will reflect on this, but at this point I beg leave to withdraw the amendment.

Amendment 32 withdrawn.

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The MoJ recognised the impact on diversity in its response to the consultation on this issue, and has committed to improving diversity by supporting the Judicial Diversity Forum. I sat on that forum and do not for one moment doubt the commitment of its members, but its success has been limited despite the commitment and determination of all those involved. Even if it improves its success rate and manages to attract and support far more applicants from non-traditional backgrounds, they can be appointed only to a vacant post. Raising the mandatory retirement age of judges to 75 is bound to restrict the number of vacant posts, which is why I support the amendment.

[Baroness Janke (LD)]

My Lords, it is clear that everyone in the Room would say that it is important that our senior judges, in the Court of Appeal and the Supreme Court, reflect the society in which we live if they are to be respected and seen as part of the current era. At the moment, they do not, and we are all concerned about this.

From what we hear, the amendment is acceptable and does not have the effect on diversity that raising the minimum retirement age to 75 would. It is worth noting the comments on the Ministry of Justice’s 2020 statistics:

“Although the proportion of judges that are women continues to increase gradually, women remain under-represented in judicial roles in 2020. This is particularly the case in the courts where 32% of all judges, and 26% of those in more senior roles (High Court and above) were women—compared with 47% of all judges in tribunals.”


The BAME situation is much worse:

“The proportion of judges who identify as Black, Asian and minority ethnic … has also increased … but remains lower for court appointments compared to tribunals, particularly at senior levels (4% for High Court and above, compared with 8% of all court and 12% of all tribunal judges). However, the association between age and ethnicity—with lower a proportion of BAME individuals at older ages, and more senior judges being older on average—should be borne in mind.”


I wonder whether the Minister can say whether the Government have thought of doing an impact assessment. The one at the beginning of the Bill does not address this issue at all. If there is some argument about it, it would be good to have an impact assessment that lays out the evidence we have heard from some noble and learned Lords today.

I look forward to the Minister’s response but very much hope that, by the time we get to Report, we have a body of evidence on which to make this judgment. I am sure that the noble and learned Lords here today will be able to make some of that available.

[Lord Woolf (CB)]

I am sorry; could I just add one thing? The noble and learned Lord, Lord Brown, was sitting here wanting to address the Committee. I know without hesitation or doubt that he was going to support the view I was taking. So, I am afraid that we have to bear in mind that there are some who have a different view from that expressed by other noble and learned Lords and who would take a more relaxed view than has been indicated about the Government’s proposals.

Public Service Pensions and Judicial Offices Bill [HL]

Baroness Janke Excerpts

Report stage
Monday 29th November 2021 Lords Chamber

[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.

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[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.

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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.

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[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.

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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.

[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.

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[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.

Public Service Pensions and Judicial Offices Bill [HL]

Baroness Janke Excerpts

3rd reading
Monday 6th December 2021 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I thank the Minister for his courtesy and helpfulness during the passage of the Bill. It was very much a learning process for me as the first Bill to which I had given such a close and involved consideration. I learned lessons, one of which is to check which group a particular amendment is in and get it right. I thank the Minister, as well as the officials. We seem to be saying farewell, but I suspect that it is au revoir and that, in one way or another, we will be returning to these issues.

[Baroness Janke (LD)]

My Lords, I too thank the Minister; I thank him for the letter I received today, which answered the question that he referred to, as well as for his leadership and his open and engaging approach. He has ensured that we have had opportunities to be fully briefed on the Bill. As others have said, it is a very complex Bill, wide-ranging in scope, and has implications for millions of citizens, particularly public sector workers.

I also thank all noble Lords for their contributions. As the noble Lord, Lord Davies, said, I am sure that we have all learned a great deal from the Bill. I certainly know a lot more about public sector pensions than I did when we started out. I express my appreciation to the Bill team, for its expert help and support and, not least, its patience in explaining some of these complexities.

Noble Lords across the House have made valuable contributions; certainly, the judicial offices part of the Bill saw a very high-quality debate, with issues arising that apply not just to judicial offices but across the board, to public services and the holding of high office. Again, I thank colleagues for their co-operation. I believe that we have worked hard and well on this Bill.

Lastly, I put on record my thanks to Sarah Pughe in the Liberal Democrat Whips’ Office, for her work on the Bill, and for the professional support that she has given me throughout its passage.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I echo what the noble Baroness, Lady Janke, has said. I thank the Minister and his team for their comprehensive support to my noble friend Lord Davies of Brixton and myself. It was a very complicated Bill and I know that, like the noble Baroness, Lady Janke, I needed some guidance through it. This is important legislation for public service pensions. It will guarantee pensions for public servants—something which, of course, we all agree with. We are aware that there may well be further amendments in the other place as well as further legislation given that there are ongoing cases currently in court. My noble friend Lord Davies of Brixton is relatively new to the House and, I have to say, he has started extremely well. It is not often, when taking part in your first Bill, that you manage to influence government policy in the way that he has; my noble friend deserves congratulations.

I was present throughout all the debates and, when we debated the mandatory retirement age, I felt there was a sense of relief because it was an easily understood issue. Many noble and noble and learned Lords took part in that debate with a level of passion not forthcoming in the other more technical parts of the debate. Nevertheless, I thank the Minister for his support as the Bill transitioned through the House.

Public Service Pensions and Judicial Offices Bill [HL]

Baroness Janke Excerpts

Consideration of Commons amendments
Wednesday 9th March 2022 Lords Chamber

[Lord Polak (Con)]

My Lords, it is a pleasure to follow my noble friend. I will be brief. The UK is Israel’s third largest trading partner, with £2.7 billion-worth of British exports and an overall trade relationship worth £4.8 billion. With improved and growing relations in the Middle East between the Arab world and Israel—the Abraham accords were referred to—and the UK’s very strong connection with Israel, I must say that the BDS campaign is a relic of a past war which is no longer being fought in the region, but rather by a small and divisive minority here in the UK.

Amendment 54, which has passed in the other place, will put an end to the politicisation of public sector pension funds. The main goal of local authorities—in my view as someone who is not a pensions expert—is to improve community cohesion, create local jobs and increase economic growth opportunities in their area. Supporting this amendment will allow the Government to send a clear message that global cohesion on an international scale—and the enhancement of economic growth and opportunity on a local level—should not be jeopardised by the divisive politics of a very small minority.

[Baroness Janke (LD)]

My Lords, I too thank the Minister for his presentation and the noble Lord, Lord Davies, for bringing forward these amendments. I also declare my interest as set out in the register.

As my noble friend Lady Kramer said, Amendment 54 is a crude and oppressive attempt to fetter the discretion of local government pension schemes. It was introduced late and with minimum scrutiny. The Government should not be in the business of directing how local government pension schemes should invest their funds. These funds are set up under strict legal requirements, as we have seen. Their members are very often vocal about wishing to have ethical considerations considered as part of their investments. As far as I can see, schemes do not appear to have been damaged in any way by investments of local government pension schemes.

The job of pension scheme managers should not be to look at UK foreign policy when setting their investment strategy. That really is not their job. Foreign policy changes, and Governments change, so are we really expecting local government pension scheme fund managers to change their long-term investment strategy every time the UK’s foreign policy changes?

As I said, local government pension schemes aspire to invest ethically, with the members of such pension schemes having the right to express their ethical views and to have them taken into account. Why should these people not require ethical considerations? As my noble friend Lady Kramer mentioned, a clear example in the 1980s was disinvestment from South Africa. The then UK Government were obdurate and determined to defend South Africa from financial sanctions despite the violence, discrimination and widespread human rights abuses of apartheid. I, for one, cannot see why pension schemes should not reflect the views of their members when they want to protest against human rights being abused, as was happening in South Africa.

In the mid-1980s one in four Britons were boycotting South African goods. Many local councils followed their local communities and measures were taken to disinvest from South Africa, including pension schemes, and there were boycotts of South African goods and the boycott of Barclays Bank, which pulled out of South Africa. It was certainly said at the time that foreign banks calling in South African loans was one of the reasons given by the South African President that enabled him to agree with his party the release of Nelson Mandela. So I do not accept that pension schemes should not be used for these purposes.

I feel that this is a measure introduced by a Government with an authoritarian record who wish to take more and more powers to themselves and using the whole idea of BDS to justify that. The amendment is also so loosely worded—as my noble friend Lady Kramer has said, it is directions, not advice, that is being given— that it could easily prevent local government pension schemes making prudent investment decisions based on environmental, social and governance considerations, as is part of their code of conduct. For example, the local authority pension scheme of my former authority, Bristol, sought to disinvest from the tobacco industry as a result of the campaign by Smokefree Bristol. I know of local authorities that wish to disinvest from Saudi Arabia on the grounds of arms sales, and others are looking at boycotting investment in China on the basis of its treatment of the Uighurs and its conduct of the affairs of Hong Kong. As my noble friend Lady Sheehan has said, carbon-neutral boycott is now a common principle, and many local authority pension schemes wish to disinvest from further investment in local gas and coal.

We have experienced in other legislation the relentless expansion of government powers. There is an opportunity in this amendment for the Government to interfere in pension scheme investment when it is not in line with their own views—and I have to say that Governments are notoriously slow in catching up with public opinion.

I thank the noble Lord, Lord Leigh, for clarifying that criticism of the Government of Israel is not at all anti-Semitic. I would also like to thank the noble Baroness, Lady Deech, for her contribution—although she seemed to imply that if we support this Motion then we are somehow being anti-Semitic. I disagree with the noble Baroness, Lady Altmann, with whom I have had the pleasure of working on many pension schemes issues: I do not believe that there is any anti-Semitic intention behind this. I do not see why, if people object to the Israeli Government’s treatment of the human rights of Palestinians, they should not demonstrate that and campaign for disinvestment from Israel if that is part of their beliefs.

The amendment is ill thought-out, badly worded, hastily constructed and has been introduced with no scrutiny, and I do not believe we should support it. If the noble Lord, Lord Davies, moves his amendment and tests the opinion of the House, we will support him.