Judicial Pensions Regulations 2022

Lord Davies of Brixton Excerpts

Monday 4th April 2022 Grand Committee

[Lord Davies of Brixton (Lab)]

My Lords, I welcome the regulations: I am in favour of good pension schemes for our public servants, and this certainly counts as a good scheme. I thank the Minister for his clear and detailed explanation of the regulations and the reasons for the specific characteristics of the proposals compared with other public sector pension schemes.

As has been explained, the fact that the scheme is good is because of the particular characteristics of the workforce, as it were, and a strong case has been made. I would just express a word of caution here. It is difficult to constrain unique circumstances. There are always other circumstances that might be argued to be similar. There will obviously be room for debate about how similar the circumstances need to be to trigger the special circumstances. A strong case has been made for this being a good scheme, but similar problems of recruitment and retention, at least potentially, might arise—for example, with persuading senior medical surgeons to remain in the workforce. There is a clear suggestion that surgeons are leaving because of the impact of the normal rules on pensions. I have heard the same problem raised in relation to senior figures in the military. In some way I welcome the fact that it is possible to argue that other people are entitled to similar advantages.

The beneficial deal that the judges are receiving here does not consist just of the scale of the benefits, although they are undoubtedly good. There is also this special issue of the tax treatment; it is a slightly separate issue. The Minister needs to bear in mind that his colleague the Chancellor of the Exchequer has frozen the limits on the lifetime allowance and the annual allowance for prolonged periods, and this is having an increasing impact on people’s pensions. It is now reaching well beyond those who might be characterised as high earners. It is reaching down and becoming a problem, not for people with average earnings but certainly for those well below the rate at which the upper-tier tax rate comes into effect.

There is an issue here that the Government will need to confront. I understand that this is not in the Minister’s remit, but I am just flagging it up. It cannot be said that this problem applies only to the judiciary. It is a general issue and will become increasingly difficult for the workforce, given that the limits are currently being frozen for prolonged periods. One suspects that what the Chancellor has in mind here is increasing public revenues, but there is inevitably a cost to be paid in its impact on people’s pay.

We touched on these issues when the Bill—now Act—was going through, but I think our focus was on other issues; I mentioned these points in passing. Given the regulations, I emphasise that I do not think these issues are quite as self-contained as the Government suggest.

The temporary reduction is an interesting development. It is very scheme specific, but it is an issue raised by a number of the public sector schemes. Given that we have now passed the deadline, do we have any idea at this stage how many members have opted for the lower-rate contributions? The difference in what they are being asked to pay is not all that substantial, but one understands the sensitivity of take-home pay, even for judges. It would be interesting to know whether any figures are available. We are now into the new scheme, so presumably people must by now have opted for the lower or the higher rate, and it would be interesting to know what impact that option has had.

As a final point, I just wish that the terminology was slightly different. This has been referred to—I raised this point when we were discussing what is now the Act—but I struggle with the concept of tax being unregistered. To me, a “tax unregistered” scheme is a scheme where people and their employers are not entitled to any tax relief at all. However, in this case, they clearly are entitled to tax relief so the term “tax unregistered” does not make a lot of sense in practice. Given more time, a more judicious term—I am not making a pun—could have been used for these circumstances.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, I do not know whether the noble Lord has come to the end of his remarks; it appears that he has. There is a Division in the Chamber. The Committee will adjourn for as long as it takes for noble Lords to vote—perhaps not less than five minutes and not more than 10—but we will go with the flow.