Facts

High Court and Crown Court judges are members of a pension scheme. Since 1993, this has been the Judicial Pension Scheme (JPS). This scheme was generous. It provided for:

  • An annual pension at 1/40th of a judge’s final pensionable pay multiplied by the number of years services (capped at 20 years)
  • A lump sum payable on retirement of the amount of 2.25 times the annual pension rate
  • A pension age of 65
  • A surviving spouse’s benefit pay at half the rate of the member’s pension

On 1 April 2015, the JPS was closed and serving judged were compulsorily transferred into a replacement scheme: the new Judicial Pension Scheme (NJPS). This scheme was less generous. It provided for:

  • An annual pension at 1/43rd of a judge’s pensionable pay based on career average earnings, (uncapped)
  • No lump sum payable on retirement
  • A pension age of equal to the state pension age (65 or above)
  • A surviving spouse’s benefit pay at 3/8th the rate of the member’s pension

Transitional provisions operated so that older judges could continue to be part of the JPS. Some older judges could continue to be members of the JPS until their retirement, whilst others would receive tapered protection until 1 February 2022 (at the latest), when they would be transferred to the NJPS. Around 85% of judges would receive some sort of protection to their pension.

The judges brought a claim of indirect age discrimination in relation to the transitional provisions. They argued that they put younger judges at a disadvantage.

Some judges also claimed further that the transitional provisions were sex and/or race discrimination. There were also additional claims of equal pay.

The Ministry of Justice conceded that the transitional provisions did subject younger judges to a disadvantage, but claimed that such treatment was justified. The sole issue for the Employment Tribunal was whether such treatment could be objectively justified.

Decision

The Employment Tribunal looked at the legitimate aims behind the transitional provisions. It identified from statements made to the Chief Secretary to the Treasury that the aim of the MOJ was to protect those with “ten or years less” until retirement.  The Employment Tribunal said that the MOJ identified an age group, but had no obvious “underlying aim”. Despite this, the Employment Tribunal said that a lack of precision would not be fatal to an argument that a legitimate aim existed.

The Employment Tribunal therefore went on to consider the MOJ’s submissions for further insight into the Chief Secretary’s thinking and in order to identify a legitimate aim.

The Employment Tribunal rejected an argument that it was a legitimate aim to relieve older judges from a hardship that they would experience in adjusting to pension reform in the absence of transitional. 

The Employment Tribunal went on to consider another potential legitimate aim: consistency. The MOJ has said in evidence that it aimed for a consistent approach to pensions when considered alongside other public sector reforms that were taking place. The Employment Tribunal found that the idea of protecting those within ten years of retirement had its origins in discussions between different government departments and trades union. The Employment Tribunal accepts that consistency is an aim which might legitimately be pursued, but there was insufficient evidence to show in this case that that aim existed.

Notwithstanding the fact that no legitimate aim had been made out, the Employment Tribunal went on to assess the proportionality of the transitional provisions.

The Employment Tribunal held that judges compelled to transfer from the JPS to the NJPS suffer an extremely serious adverse impact on the value of their pension. The contributions required to replace the lost value was estimated at approximately £30,000 a year. This sum was said to be “unrealistic” for judges. The Employment Tribunal held that the appropriate balance had therefore not been struck. Protected judges suffered only slightly (if at all), whereas unprotected judges suffered a severe adverse impact. The MOJ did not adduce any evidence showing that a shorter period or protection (or a lesser degree of protection) would not allowed them to meet either aim of protecting those close to retirement or ensuring consistency amongst public sector pension reform.

As there was no legitimate aim behind the transitional provisions, and they were not proportionate, the Employment Tribunal ruled against the MOJ. 

The judgment is available here.

McCloud and Mostyn and others -v- (1) The Lord Chancellor and Secretary of State for Justice (2) Ministry of Justice, 11 November 2016, 2201483/2015 and others, 2202075/2015 and others

Comment