DRAFT JUDICIAL PENSIONS (FEE-PAID JUDGES) (AMENDMENT) REGULATIONS 2023

Debate between Mike Freer and James Duddridge

Tuesday 21st February 2023 General Committees

[The Parliamentary Under-Secretary of State for Justice (Mike Freer)]

I beg to move,

That the Committee has considered the draft Judicial Pensions (Fee-Paid Judges) (Amendment) Regulations 2023.

It is a pleasure to serve under you this morning, Ms Nokes.

The statutory instrument before us amends the Judicial Pensions (Fee-Paid Judges) Regulations 2017, which established the Fee-Paid Judicial Pension Scheme 2017. I shall refer to those as the fee-paid regulations and the fee-paid pension scheme respectively.

The fee-paid pension scheme currently only provides benefits for eligible fee-paid judicial service on and after 7 April 2000. The main purpose of the SI is to amend the fee-paid regulations to provide pension benefits for eligible fee-paid judicial service before 7 April 2000 and provide a remedy following the judgments in the cases of O’Brien against the Ministry of Justice, known as “O’Brien 2”, and Miller and others against the MOJ, known as “Miller”.

The fee-paid pension scheme commenced on 1 April 2017 when the fee-paid regulations came into force. It provided pension benefits for eligible fee-paid judicial service on and after 7 April 2000 that mirrored those for salaried judges under the Judicial Pensions and Retirement Act 1993, known as JUPRA. In 2018 the European Court of Justice found that eligible fee-paid judicial service prior to that date should also be taken into account for the purpose of calculating pension benefits. In addition, in 2019, the UK Supreme Court found that the time limit for fee-paid pension entitlement claims runs from the date on which the judge retired from judicial service, rather than the date on which they left the fee-paid office concerned. Even though the fee-paid pension scheme closed to further accruals on 31 March 2022, with pension accruals for all judges from 1 April 2022 being in the reformed Judicial Pension Scheme 2022, it is important that judges receive the pension benefits they are entitled to for their historical fee-paid judicial service. The instrument achieves that and provides a remedy for both of the judgments to which I have referred.

In order to achieve the required remedy, the SI makes a number of important changes to the fee-paid pension scheme. Most notably, salaried judges had access to different pension arrangements under the Judicial Pensions Act 1981 before the introduction of the JUPRA pension scheme in 1995. Those earlier arrangements for salaried judges had different accrual rates and scheme features and it has been necessary to retrospectively mirror those provisions and the associated eligibility criteria in the fee-paid pension scheme by introducing new “pre-1995” provisions. I hope that that is all clear—I jest, but it is quite a complex issue.

It is also important to update the schedule of eligible offices for the fee-paid pension scheme, to ensure that all judges who are eligible for a pension are included in the fee-paid regulations. Where eligibility has been established, those offices have been added to the schedule.

The SI also contains a number of other supplementary amendments that are necessary to ensure that fee-paid judges who are eligible for a pension settlement under the fee-paid pension scheme are given the correct settlement. One of those supplementary amendments is the inclusion of a facility for “small pension commutation”. Fee-paid judges do not always build up significant amounts of reckonable service, so we have included provisions that mirror the trivial commutation and “small’ pot” facilities that may be available in other pension arrangements.

The instrument also provides a further window for eligible judges—those with fee- paid service between 1995 and 2006—to purchase additional benefits in schemes constituted by the fee-paid regulations, or to vary purchases they have previously made. Again those provisions mirror those that were historically provided to relevant salaried judges.

The SI also updates the regulations that set out requirements for the payment of contributions by scheme members in respect of service prior to 7 April 2000; provides for a reconciliation of payments in lieu of pension, which have been made to judges, to formal entitlements under the amended regulations; and corrects some minor drafting errors in the existing regulations. Finally, the instrument regularises some partial retirement payments that were originally inconsistent with a restriction in the fee-paid regulations, holding that this option could only be exercised on or after 1 April 2017. That date restriction is also removed by the amendments.

We have undertaken on changes to the fee- paid pension scheme. The Ministry of Justice published a consultation on its proposals for amending that scheme on 24 June 2020, and 106 responses were received by the time the consultation closed on 18 September 2020. The responses were broadly supportive of the proposals, and on 10 December 2020 the Government response was published, setting out how the proposals had been refined to take account of those responses.

Officials at the devolved Administrations in Scotland, Northern Ireland, and Wales have been kept apprised of the development of the amendment regulations, in particular in relation to the offices whose jurisdictions are in those countries, and their views have been reflected in the drafting.

In the case of three fee-paid judicial offices included in the eligibility schedule, targeted consultations, including with office holders, were carried out to provide assurance that the correct service limitation dates are being applied. The service limitation date marks the point from which a salaried comparator judge became eligible for a judicial pension.

In conclusion, I would like to assure Committee members that the amendments to the fee-paid pension scheme set out in this SI are necessary to ensure that judges with historical fee-paid service get the pension benefits to which they are entitled and, together with other measures on judicial pay and pensions, those amendments will help to ensure that we can continue to support our esteemed judiciary.

[Sir James Duddridge (Rochford and Southend East) (Con)]

This process with judges and the McCloud judgment has triggered further things beyond judges’ pensions. It may disorderly and beyond the Minister’s remit, but could he write to the Committee to say what other public sector pension arrangements will be affected following McCloud? What will be the costs? Does it mean that we will have to come back for SIs for every single pension arrangement within the public service or, after this initial one is done, we can just come back once?

[Mike Freer]

My hon. Friend is correct that the McCloud judgment is an ongoing issue facing all pension schemes. The impact of that judgment is currently being worked through and any relevant changes that may be required will have to be brought forward for consideration. I will ensure that my hon. Friend gets a detailed letter explaining the processes.

Marriage (Same Sex Couples) Bill

Debate between Mike Freer and James Duddridge

Tuesday 21st May 2013 Commons Chamber

[Mike Freer]

May I return to the topic of amendment 49, which I was very pleased to co-sign with the hon. Member for Brighton, Pavilion (Caroline Lucas)?

Let me start by reassuring my hon. Friend the Member for Bournemouth East (Mr Ellwood) that building a stable and cohesive society is one of the most fundamental roles of Government, so to be doing that today through debating this Bill is a highly appropriate use of parliamentary time. To those who ask whether we should be doing something else, I say that I can, perhaps unusually for a man, multi-task, so I think I can manage both to speak in this debate and to deal with other pressing issues.

Turning specifically to the amendment, it is important to distinguish between contracted-in and contracted-out pensions. This is quite a technical change and it does not apply to contracted-out pensions; it applies only to contracted-in pensions. As the hon. Member for Brighton, Pavilion said, two-thirds of pension schemes already allow spousal survivors in civil partnerships equivalent widow or widower benefits without having to be forced to do so by the law, but one-third of them are discriminating. What is worse, that is an optional discrimination; they are choosing to discriminate against surviving civil partners in contracted-in pension schemes.

Let me try to explain why that is so fundamentally wrong. The hon. Lady gave the example of John Walker. Had he married a woman, she would have got a pension on his death of £41,000, but his civil partner got a pension of just £500 per annum. That diversity is the wrong kind of diversity; that is pure discrimination. Let us assume two men or two women join a pension scheme on the same day, and they both have the same level of service, and they both enter into some form of partnership, but one gets married and the other goes into a civil partnership, and let us also assume that the day after they get married or enter their civil partnership, they are both, by some quirk of fate, killed in a car accident. The pension of the widow in marriage will be go back to the date her former husband joined the pension scheme, let us say some 20 years previously, but the civil partner only gets to go as far back as when civil partnerships came into law. That cannot be right by any stretch of the imagination.

When researching why the Government were resisting this amendment, I was told that one of the issues is the cost factor. Everything we as a Government do has a cost, so I thought there must be some huge cost—perhaps £4 billion, which was a ready price-tag yesterday. In fact, the cost of giving equal pension rights on contracted-in pensions to civil partners is £18 million—not £80 million or £80 billion, but £18 million. It is true that that is a lot of money, and I certainly would not mind having £18 million in my bank account, but let me put that into perspective. The assets under management of the pension industry amount to £360 billion, so the cost of removing this anomaly is 0.006% of assets under management. I do not think that is a price we cannot afford.

I was also told that it is wrong to force pension providers to make retrospective calculations on which they did not base their pension actuarial decisions. That, too, is a flawed argument. As the hon. Member for Brighton, Pavilion said, the actuaries behind a pension scheme make a whole variety of assumptions about longevity, how many of their pensioners will die in service and how many of them will die as a pensioner, and how long they will stay in the pension, and the accrual rate will be based on an assumption that most of their members will get married. It is complete nonsense to suggest that pension providers cannot allow civil partners who survive to get the same benefit as a widow or widower because it has not been accrued, as there is absolutely no evidence that the actuaries have not been able to make that calculation. If they made the calculation that X% of their pensioners would get married, they could simply make assumptions about a man in a civil partnership. They will have had no knowledge of whether that man or woman would have decided to get married or to enter a civil partnership and there is no logical or financial reason why the anomaly cannot be removed.

I hope that the Minister will give some commitment from the Government that the anomaly will be reconsidered. I know it was mentioned in Committee and that the Government are resisting the amendments, but I urge my ministerial colleagues to address the issue.

[James Duddridge]

I totally support the comments my hon. Friend is making about removing the anomaly. Is there a list of companies that are already doing the right thing and, crucially, those that are doing the wrong thing? Are those companies named and shamed? Often, when we flick through the glossy corporate reports they say lots of glowing things and that the company is doing the right thing, but are they putting their money where their mouth is and supporting equal rights?

[Mike Freer]

My hon. Friend makes a good point. I have tried to dig around to find out the size of liabilities and which companies are doing this, but unfortunately I cannot find that information. It is fair to say that many corporates take great pleasure in trumpeting in their annual reports what they would regard as their social responsibility, but I think that they should be saying loud and proud—to coin a phrase—that they are treating civil partners in the same way as heterosexual widows and widowers.

I hope that my ministerial colleagues can give some ground and say that the Government are willing to reconsider the matter. The cost is not even a rounding error in the Government accounts or for the pension industry, but the benefit to the recipients is beyond value.