Government “not” giving special tax arrangements to judges – Falconer
Lord Chancellor Lord Falconer has rejected claims that he is planning to exempt judges from a new tax on their pensions in a bid to ward-off the threat of a large-scale walkout.
Speculation was sparked when last week Lord Falconer unveiled his Judicial Pensions Bill.
The Bill came in response to tax changes announced by Chancellor Gordon Brown in this year’s Budget which from 2006, will affect people with personal pensions of more than £1.5m.
As some of Britain’s top earners, senior judges often build up big investments for their retirement, in addition to their judicial pension.
Following fears that the changes would lead to a mass exodus from the bench, opposition parties have decried the Government for planning to pass a new law which would apparently mean that judges will not have to pay the extra tax.
Conservative Shadow Work and Pensions Secretary David Willetts today criticised the Government for making “special arrangements for the few at the expense of the many”.
Mr Willets also accused the Prime Minister of offering judges a “sweetener” to appease them in light of the “mess made of constitutional issues and the future of the law lords”.
But Lord Falconer, speaking on BBC Radio Four’s PM, denounced Mr Willet’s comments as “completely untrue”, insisting that the Bill in actuality brings judges in concordance with other high earners with non-contributory pensions.
Under the terms of a primordial convention which states changes to judges’ conditions of employment must be approved by Parliament in primary legislation, they cannot opt individually to alter their pension arrangements.
The new Bill, explained Lord Falconer, was therefore designed to create a “level playing” in a bid to avoid such instances.
He explained: “As far as the judges’ pension arrangements are concerned they have to be in primary legislation in order to preserve the independence of the judiciary, the Executive shouldn’t be able, without parliament agreeing, to change their pension arrangements.”
“So no, it is not the case that judges have got a special deal”, Lord Falconer stated.
“The effect of the Bill, which we have announced in the Queen’s Speech will be that we treat it like everybody else.”
“Anybody else who had a pension scheme which they didn’t contribute to could move that scheme into something called an employee financed retirement benefit which would mean they could avoid the effect of the £1.5m cap.”
He went on: “Judges cannot do that because quite rightly all changes to their pension have to be agreed by parliament. The effect of the statute would therefore put them in precisely the same position as, for example, an employer who has got a chief executive come to work for him and paid all his or her pension arrangements.”
“So all of the speculation about why it’s been done is completely wrong. It is to create a level playing field for the judges, not to give then special arrangements.”
“The reason they need their Bill is because their pension arrangement must be dealt with by parliament and not by the Executive.”
Under the Chancellor’s changes, a new cap of £1.5 million will be placed on the capitalized value of a pension holder’s preserve.
From April 2006, income tax and a 25 per cent recovery charge will then be imposed on all capital which comes in at above that level.
The rate, however, will only concern pension funds amassed from contributions which are not liable to taxation.
Individuals who hold non-contributory schemes are free to change to a non-tax exempt scheme without incurring any loss.
But according to a document posted on the website of the Department of Constitutional Affairs, judges are frustrated that they might be shorn of this alternative.
The document stated: “In discussions with the judiciary, they have expressed the view that failure to resolve this would cause both a significant number of judges to resign, and those thinking of applying for the bench to reconsider their position.”
Opposition parties today railed against the Government, branding unfair what they described as plans to exempt judges from the new tax on their pensions.
The Conservatives said the decision marked a cynical move by the Government to head off the threat of a large-scale walkout.
But Lord Falconer maintained that his Bill is necessary to extend the same options to the judging fraternity who cannot currently opt for non-tax exempt scheme as their conditions of employment are fixed by legislation.
