On 17 July 2012, my predecessor informed the House that he had written to the heads of jurisdiction setting out his proposals for reform of judicial pensions, Official Report, column 131WS.
The Government recognise that although there is a longstanding practice that the total remuneration package offered to the judiciary, including pension provision, should not be reduced for serving judges, this forms part of a broader constitutional principle that an independent judiciary must be safeguarded. However, in the particular context of difficult economic circumstances and changes to pension provision across the public sector, we do not consider that the proposed reforms infringe the broader constitutional principle of judicial independence.
Nonetheless we have listened to the concerns of the judges and we have modified our proposals.
The judicial pension scheme will be constituted under the same legislation as will apply to other public service pension schemes. But we now propose to proceed on the basis of a new, stand-alone judicial pension scheme for which the Lord Chancellor would be the responsible authority. The scheme regulations will be subject to affirmative resolution procedure. This approach will allow the judges to participate in the governance of their pension arrangements and to have a say in how their pension terms develop in future.
It is proposed that the new scheme will apply to all judges other than those within 10 years of pension age at 1 April 2012; this group (around 75% of judges at 1 April 2012) will continue in their current schemes. Other judges will move into the new scheme for service from 1 April 2015. Those appointed before 1 April 2012, and who were aged between 51½ and 55 at that date, will have the option to defer joining the new scheme until an age-related later date; this “tapering protection” is intended to avoid a cliff-edge in treatment for those who fall just outside the group with full protection. Previous service in any of the current judicial schemes will be fully protected, continuing to be pensioned under the rules of the current scheme but reflecting the individual’s salary on retirement.
In common with the approach applying to other public service pension schemes, the new scheme will be registered with HM Revenue and Customs for tax purposes. Particular concerns have been expressed about the impact on some judges of moving to a tax-registered pension scheme. We understand these concerns and propose to address them by allowing those likely to be most affected the option of a transitional protection allowance in lieu of pension accrual in the new scheme. Eligibility to apply for this allowance will be strictly limited to those serving judges who have had continuous membership of a judicial pension scheme, who have registered their prejudicial pensions for enhanced protection under the Finance Act 2004 or fixed protection under the Finance Act 2011 and who have made no contributions to a tax-registered pension after 5 April 2006 (for those with enhanced protection) or after 5 April 2012 (for those with fixed protection).
The Government will bring forward amendments to the Public Service Pensions Bill as necessary to deliver our amended proposals.
I have today written to the Lord Chief Justice, the Lord Chief Justice of Northern Ireland and the Lord President and, via the judicial intranet, to all judges holding non-devolved office, to inform them of the Government’s revised proposals, including those in respect of transitional protection, and to provide them with further information.
The Government’s view is that the new pension arrangements will continue to provide a good way of saving for retirement and the new judicial pension scheme will remain among the most generous in the public sector.