Public Service Pensions and Judicial Offices Bill moves to Grand Committee

The Public Service Pensions and Judicial Offices Bill has been committed to a Grand Committee after undergoing a second reading in the House of Lords (HoL), with the bill expected to receive Royal Assent in early 2022.

The bill was announced by the government in the Queen’s Speech earlier this year, as the government sought to address discrimination found by the McCloud ruling and ensure “equal treatment” for all members in main public service pension schemes.

This followed a 2018 ruling, which found that changes made to firefighters and judges’ pension were discriminatory on the grounds of age, with the government later confirming in July 2019 that the ruling would apply to all public sector pension schemes.

Commenting in the HoL, Viscount Younger of Leckie, James Younger, stated: “To reassure the house, we aim for the bill to have Royal Assent in early 2022, so that chapter 4 can come into force on 1 April 2022, as set out in clause 113, on commencement.

“However, noble Lords may recall that the government set out in their consultation response in February this year that schemes would have until 1 October 2023 to introduce retrospective changes, in order to balance bringing the discrimination identified by the courts to an end as soon as possible with giving schemes and administrators the time needed to establish systems to deliver the necessary changes.

“Clause 113 therefore provides that chapter 1 will enter into force on 1 October 2023, or earlier if specified in regulations.”

However, a number of concerns around the bill were raised by members of the HoL during the debate, including around the “so-called differential treatment of judges”, particularly compared to the NHS and armed forces.

Addressing these concerns, Younger explained that judges follow a unique career path, as an appointment as a salaried judge in the UK is seen as "the culmination of a barrister’s or solicitor’s career, rather than a career path in and of itself".

“Reflecting this difference with other public sector workers is important,” he continued.

“When we return judges to a tax-unregistered scheme—which is the position that they were in prior to 2015—without these changes there would be continued issues with recruiting judges, threatening the effective functioning of our justice system and its reputation.

“While the scheme will be unregistered, it is important to note that other aspects of the scheme will be consistent with the principles of the 2015 pension reforms, to ensure its long-term affordability and fairness to the taxpayer.”

Furthermore, in relation to issues around the potential tax issues faced by doctors, Younger pointed out that the government spent £2.175bn on increasing the annual allowance and adjusted income limit in the 2020 Budget.

“These measures apply to all individuals across the UK and are a significant step in resolving this issue,” he explained.

“These changes mean that any public servant whose sole income after deducting pension contributions is less than £200,000 has been taken out of scope altogether.

"We estimate that these changes have taken up to 90 per cent of GPs and up to 98 per cent of NHS consultants outside the scope of the tapered annual allowance.”

Younger also addressed queries around the cost control mechanism, which the government recently consulted on and is currently considering responses on.

“The aim is to implement any changes in time for the 2020 valuations, and the government will legislate for any changes once they have responded to the consultation and when parliamentary time allows,” he confirmed.

In addition to this, he said that HM Treasury will set out the directions the technical detail of how the restarted 2016 valuations will operate "when possible", having been previously paused in light of the McCloud judgment.

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