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Judges pensions

Published Friday, July 5, 2019

Looks at current issues regarding judges' pensions

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A New Judicial Pension Scheme (NJPS) was introduced in April 2015 under the Public Service Pensions Act 2013. Active scheme members on that date were transferred to it, except those covered by transitional protection arrangements for those ‘closest to retirement’, who were able to remain in their existing scheme either until retirement or for a limited period, depending on their age.

The NJPS Scheme has significant differences from the earlier schemes. In particular:

  •  It provides pension benefits based on career average revalued earnings (CARE) rather than final salary;
  • Members have a pension age linked to their State Pension age; and
  • It is registered for tax purposes.

The fact that the earlier schemes are de-registered for tax purposes has protected members from reductions since 2010 in the limits to the amount that can be saved tax-free in a pension (the annual and lifetime allowances). This has been of significant value with members of those schemes having suffered “much lower falls in total net remuneration since 2009-10, compared to other judges.” To address difficulties recruiting new judges from the senior ranks of the legal profession, the Senior Salaries Review Body recommended significant increases in remuneration, particularly for members of the 2015 scheme (Cm 9716, Oct 2018, para 138).

The transitional protection arrangements for the 2015 pension reforms, have been challenged in the courts. In January 2017 an Employment Tribunal found in McCLoud v Ministry of Justice, that the transitional arrangements for judges were unlawful under equality law. This was upheld by the Court of Appeal, which in December 2018 concluded that:

We have found that in both the judges' and firefighters' cases the manner in which the transitional provisions have been implemented has given rise to unlawful direct age discrimination. In neither case could the admitted direct age discrimination be justified. In the Judges' case we see no error in the reasoning of Judge Williams either in his assessment of aims or means.

The Government was refused leave to appeal the Court of Appeal’s decision and has said it “will consider how best to compensate those affected by the judgment as part of the court process” (‘Treasury faces £4bn bill after pensions ruling,’ FT, 27 June 2019 (£)).

Commons Briefing papers CBP-8540

Author: Djuna Thurley

Topic: Pensions

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