My Lords, the regulations before us today create the New Judicial Pension Scheme 2015—NJPS—establishing the pension scheme itself and also providing for its governance structure and the operation of its employer cost cap. The NJPS is a defined benefit scheme which provides a guaranteed pension based on average pay over a judge’s career. Each year, a percentage of a judge’s salary is notionally put aside. On retirement the cash value of all these annually calculated percentage pots is added up and that is the annual pension. To protect the accumulating pension against inflation, each individual’s notional pension is uprated each year. Employee contributions remain the same and there is transitional protection for those closest to retirement. Unlike previous judicial pension schemes this scheme will not have an automatic lump sum and will be registered for tax purposes in line with the practice elsewhere in the public sector.
The Government announced at the time of the emergency Budget in 2010 the establishment of an independent review of the provision of public service pensions. The judiciary was included in the scope of this review. The review by the Independent Public Service Pensions Commission, led by the noble Lord, Lord Hutton of Furness, made recommendations for reform to public service pensions in order to make them both affordable and sustainable in the long term as well as offering certainty and fairness to public service pension scheme members and taxpayers. The Government’s response adopted many of the review’s recommendations. This included a guarantee that benefits accrued before the date of the change would be protected. It also introduced protections for those within 10 years of retirement.
On 5 February 2013, the Lord Chancellor announced to Parliament the intention to reform judicial pension arrangements in the form of the NJPS under the statutory framework of the Public Service Pensions Act 2013. The reforms to judicial pension arrangements will apply to eligible members of the judiciary in Scotland and Northern Ireland, as well as those in England and Wales. There are a number of devolved judicial offices in Scotland and Northern Ireland to which these reforms will not apply. The NJPS will be open to eligible fee-paid and salaried judicial office holders. This will be set out in a separate instrument.
The principles of the Public Service Pension Act 2013 have already been approved by this House; these regulations apply those principles, introducing a new pension scheme for the judiciary. The Government believe that the reforms to judicial pensions constitute a fair balance of costs and benefits between judicial pension scheme members and other taxpayers. I therefore commend these draft regulations to the Committee and I beg to move.