Report on the Pension Schemes Bill Legislative Consent Motion

Session: 2014/2015

Date: 27 November 2014

Reference: NIA 207/11-16

ISBN: Only available online

Content

Committee Remit and Powers

Background to the Pension Schemes Bill

The Legislative Consent Motion

Committee Consideration

Conclusion

Appendix 1 Departmental Memorandum

Appendix 2 Minutes of Evidence – 19 November 2014

Appendix 3 Departmental correspondence of 25 September 2014

Appendix 4 Relevant extract from the Pension Schemes Bill

Remit and Powers

The Committee for Employment and Learning is a Statutory Departmental Committee of the Northern Ireland Assembly established in accordance with paragraphs 8 and 9 of the Belfast Agreement, Section 29 of the Northern Ireland Act 1998 and under Standing Order 48 of the Northern Ireland Assembly. The Committee has a scrutiny, policy development and consultation role with respect to the Department for Employment and Learning and has a role in the initiation of legislation.

The Committee has power to:

consider and advise on Departmental budgets and annual plans in the context of the overall budget allocation;
approve relevant secondary legislation and take the Committee stage of relevant primary legislation;
call for persons and papers;
initiate inquiries and make reports; and
consider and advise on matters brought to the Committee by the Minister for Employment and Learning.

Background to the Pension Schemes Bill

The Pension Schemes Bill (‘the Bill’) was introduced in the House of Commons on 22 June 2014. The latest version of the Bill can be found at:

http://services.parliament.uk/bills/2014-15/pensionschemes.html

The Bill establishes a new legislative framework for private pensions, defining them on the basis of the promise they offer for members about their retirement benefits during the accumulation phase. The promise will either refer to all the benefits (defined benefits), some of the benefits (shared risk), or there will be no promise (defined contributions). It will also enable the provision of collective benefits (provided on the basis of allowing the scheme's assets to be used in a way that pools risks across membership).

The Bill also gives force to measures announced in Budget 2014 to give people aged 55 and over more flexibility about how to access their defined contribution pension savings from April 2015. It enables a prohibition on transfers out of unfunded public service pension schemes, except to other defined benefit schemes.

The Legislative Consent Motion

In O'Brien v Ministry of Justice [2013] UK Supreme Court 6, which dealt with the interpretation and application of the Part-Time Workers Directive, the UK Supreme Court held that fee-paid judicial office holders are entitled to a pension on terms equivalent to those enjoyed by their salaried counterparts. Following its decision, the Supreme Court referred the matter to an employment tribunal to determine the details of the pension entitlement.

Similar litigation is ongoing before the industrial tribunals regarding fee-paid judicial office holders in Northern Ireland: both the ‘excepted’, mainly courts, judiciary who are the responsibility of the Ministry of Justice and the ‘devolved’, mainly tribunal, judiciary who are the responsibility of the Departments for Employment and Learning; for Social Development and of Justice.

Whilst some matters remain the subject of litigation, the Ministry of Justice on 17 June 2014 published a statement indicating that, in 2015/16, it will put in place a pension scheme for eligible fee-paid judicial office holders for whom it is responsible. The scheme will apply to fee-paid service from 7 April 2000 to 31 March 2015 and will mirror the current judicial pension scheme under the Judicial Pensions and Retirement Act 1993 (‘the 1993 Act’) for salaried judiciary. When the 1993 Act was enacted, it was not envisaged that fee-paid office holders would be entitled to a pension.

To ensure that affected individuals are not without pension provision longer than is necessary, the Ministry of Justice has committed to establishing this scheme during the 2015/16 financial year through the introduction of The Pension Schemes Bill.

Amendments made to the Bill during Committee Stage in the House of Commons have introduced a provision to allow a pension scheme to be established by the Lord Chancellor, through regulations, for fee-paid judicial office holders, as required by case law. The provision deals with a devolution matter as it extends to cover devolved fee-paid judiciary in Northern Ireland. The provision is aimed at old and transitional cases. Pensions for eligible fee-paid office holders in Northern Ireland will in future be governed by the new schemes under the applicable recent public service pensions legislation.

The Pension Schemes Bill amends the 1993 Act so as to empower the Lord Chancellor to establish, by regulations, a pension scheme for fee-paid judicial office holders; and to facilitate a small number of technical, consequential changes.

The scheme established by the 1993 Act for salaried judiciary is UK-wide. With its provisions now to be extended to cover fee-paid judiciary, this would include those eligible excepted office holders among the Northern Ireland court judiciary for whom the Ministry of Justice is responsible. The precise posts affected have yet to be determined in Northern Ireland.

As the 1993 Act, presently constituted, applies also to devolved salaried judicial positions for which Northern Ireland Departments have responsibility, extending its application to eligible devolved fee-paid positions would appear to be the best means of ensuring that eligible fee-paid members of the judiciary receive an equivalent pension to their salaried counterparts at the same time.

Litigation already before the industrial tribunals includes claims from both devolved and excepted judiciary here. The expectation of timely action is clear and, although there are outstanding questions for the concerned Departments to resolve as to coverage of new arrangements, the Department for Employment and Learning is satisfied that its fee-paid tribunal judiciary require appropriate pension arrangements to be put in place. Moreover, when the industrial tribunal comes to review developments in due course, it will want to ensure that any claimants in this jurisdiction are not prejudiced by failure to put in place appropriate arrangements in 2015/16.

Given this situation, the Departments for Employment and Learning, for Social Development and of Justice have agreed that it is appropriate that the provisions in the Pension Schemes Bill relating to a pension scheme for fee-paid judges extend to judicial office-holders in the devolved field. The effect of this is to give the Lord Chancellor powers to establish a pension scheme for fee-paid judiciary which will include the devolved fee-paid judicial office holders, ensuring that relevant individuals have access to arrangements in Northern Ireland on the same terms and at the same time as their excepted counterparts.

Committee Consideration

The Minister for Employment and Learning wrote to the Committee for Employment and Learning on 25 September 2014 notifying it of the outcome of the UK Supreme Court in the case of O’Brien –v- Ministry of Justice which held that fee-paid judicial office holders are entitled to a pension on terms equivalent to those enjoyed by their salaried counterparts. The Minister also outlined that the impact of this judgement is that the Ministry of Justice tabled an amendment on 11 September to the Pension Schemes Bill currently before Parliament to establish pension arrangements for fee-paid judicial office holders.

The Minister advised the Committee that the Departments responsible for devolved Northern Ireland judiciary have agreed that it is appropriate to seek to extend the amendments now being taken forward in Parliament, to the Pension Schemes Bill, so that they may be applied to Northern Ireland.

The Minister also advised the Committee that he has obtained Executive approval to proceed by Legislative Consent Motion.

The Committee received the Legislative Consent Motion on 12 November 2014 and considered it at its meeting on 19 November 2014. Officials from the Department of Employment and Learning and the Department of Justice briefed the Committee on the content of the Legislative Consent Motion. In response to questions from the Committee, the Officials outlined the reasons for choosing a legislative consent motion to amend the current legislation.

To ensure that a remedy scheme can be operational in 2015/16, appropriate primary legislative powers should be in place early enough to allow for the preparation of regulations establishing the scheme and the setting in place of necessary supporting IT, administrative and governance arrangements.

Three legislative options are open to the Department.

The first is to identify a suitable primary legislative vehicle to take forward the relevant amendments. Unfortunately, such a vehicle is unlikely to become available in the immediate future and, if this option were to be pursued, the establishment of a pension for fee-paid devolved judicial office holders would be significantly delayed.
A second alternative, the development of an Assembly Bill specifically for the purpose of providing entitlement, would be a lengthy process and would be a disproportionate use of resources and time given that, currently, only a small number of individuals may be affected. Again, pursuing this option would significantly delay the establishment of the pension.
Option three, a legislative consent motion, is considered to be the most timely, reasonable and proportionate way forward in the circumstances.