Judges’ pension schemes

Reformed pension schemes were introduced across the public service from 1 April 2015 (2014 for local government) under the Public Service Pensions Act 2013.  Key features of the new schemes are that they provide pension benefits based on career average revalued earnings rather than final salary, and individuals have a normal pension age linked to their State Pension age (except for the firefighters, police and armed forces, which have a normal pension age of 60). Active scheme members on that date were transferred to the new, 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. For more detail, see Public Service Pensions: the 2015 reforms, Commons Library Briefing Paper, CBP 5768, July 2021.

The new scheme introduced for judges was the Judicial Pension Scheme 2015 (JPS 2015). Transitionally protected judges were able to remain in their existing scheme – for most serving salaried judges, this was the scheme established under the Judicial Pensions and Retirement Act 1993 (JUPRA).

JPS 2015 had significant differences from the ‘legacy’ schemes. In particular:

• It provided pension benefits based on career average revalued earnings (CARE), rather than final salary.
• Members had a pension age linked to their State Pension age.
• It is registered for tax purposes, whereas the legacy schemes were not. This meant that its members were subject to the annual allowance and lifetime allowance, which limit the amount of tax-relieved saving an individual can build up.

The Government said in July 2021 that the introduction of the 2015 pension reforms was “particularly detrimental to many judges” as membership of JPS 2015 was:

significantly less financially beneficial compared to the legacy pension schemes. A significant reason for this was primarily because NJPS is a tax-registered scheme, meaning members are subject to annual and lifetime allowance limits on the tax-relieved benefits accrued within the scheme. In 2018, the Senior Salaries Review Body (SSRB) published its Major Review of the Judicial Salary Structure which highlighted escalating recruitment and retention problems at all levels of the judiciary. It concluded that these problems were caused principally by the 2015 pension reforms and subsequent changes to pension tax thresholds.

McCloud

The transitional protection arrangements for the 2015 pension reforms, were 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. 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 court remitted the matter back to the Employment Tribunal to determine a remedy in respect of the litigants (HCWS 1725, 15 July 2019)

Following consultation on measures to address the discrimination identified in the McCloud litigation, the Ministry of Justice (MoJ) confirmed in February 2021 that subject to parliamentary time and approval of the necessary legislation, it would run an options exercise in 2022 for eligible non-claimant judges. They would be able to choose, retrospectively, whether to have accrued benefits in the 2015 pension scheme or the legacy scheme from 1 April 2015.

In addition, the MoJ said it intended to introduce a reformed judicial pension scheme in April 2022. Most of the features of the new scheme would be in line with the 2013 Act reforms, but it would be non-registered for tax purposes. In response to concerns raised in the consultation, judges would have the temporary option of paying reduced contributions and building up benefits at a lower rate. The Government launched a consultation on draft regulations for a Judicial Pension Scheme 2022 on 23 July 2021, to run till 8 October.

Pensions for fee-paid judges

The MoJ is also responding to litigation in the O’Brien and Miller cases, which established the entitlement of fee-paid judges to pension benefits in respect of service before 2000:

• In February 2013, the Supreme Court decided in O’Brien 1 that fee-paid judges had been treated less favourably than relevant full-time salaried judges because they had not been entitled to a pension. This resulted in the introduction of the Fee-Paid Judicial Pension Scheme (FPJPS) for eligible fee-paid judicial office holders with reckonable service from 7 April 2000 up to 31 March 2015. Transitional protection or tapering arrangements may apply in respect of service after 31 March 2015, in respect of a transfer to JPS 2015.
• In O’Brien 2, in November 2018, the European Court of Justice concluded that part-time work before 7 April 2000 (the deadline for transposing the Part-time Workers’ Directive into UK law) must be taken into account when calculating a pension.
• In December 2019, the Supreme Court held in Miller that the three-month time limit for making a claim in relation to the O’Brien judgments ran from the date of a claimant’s retirement from all judicial offices and not from the end of each fee-paid appointment.

This meant the Government needed to make pension scheme membership available to eligible fee-paid judges in respect of service before 7 April 2000 and amend the FPJPS membership criteria to reflect the Miller judgment.

In a consultation on its remedy proposals in June 2020, the MoJ explained that the current provisions of FPJPS could be extended to cover service between 31 March 1995 until 31 March 2015. For service before 31 March 1995, it proposed to provide pro-rata pension entitlement based on the benefits that were available to salaried judges in judicial schemes at the relevant time. In a statement to the Employment Tribunal in May 2021, the MoJ said amendments to the FPJPS Regs were expected to come into force on 1 April 2023, a year later than originally intended. This deferral would not affect the closure of the FPJPS to future accruals on 31 March 2022, the McCloud remedy, or the introduction of JPS 22 from 1 April 2022.

Public Service Pensions and Judicial Offices [HL] Bill

The Public Service Pensions and Judicial Offices Bill was published in the House of Lords on 19 July 2021. The House of Lords Library produced a briefing for Second Reading on 7 September, where the changes to judges’ pensions were broadly welcomed.

Part 1, chapter 2, would provide for the options exercise for judges with ‘remediable service’. The Ministry of Justice anticipates this taking place in autumn 2022.

The Judicial Pension Scheme 2022 will be introduced under existing powers in section 1 of the Public Service Pensions Act 2013. Provisions in the current Bill are needed to enable this.