Non-legal tribunal members have previously been denied access to a pension scheme. Now, they have not been given access to the same occupational pension scheme as judicial members but have been offered access to the NEST (national employment savings trust) scheme.
Members have been given a time-limited offer to accept membership of the NEST backdated to November 2012 (or later if employment began later). The MOJ (Ministry of Justice) will meet both employee and employer contributions between then and April 2021.
We have sought legal advice on some of the points of the offer below.
About the offer
NEST is a pension scheme set up by the Government but run independently from it. It was introduced as part of auto-enrolment.
A defined contribution scheme is being offered to non-legal tribunal members. Money is paid in by you or your employer over time and is then invested by the pension provider. The size of the pension pot you’ll be able to take out when you retire depends on how much was paid in and the level of growth.
This is different to a defined benefit scheme, also known as a ‘final salary’ or ‘career average’ pension. The size of pension you receive when you retire depends on the amount you earn, the length of time you've been paying into the scheme, and the terms of the individual pension scheme. This is the type of scheme that is offered to legal tribunal members.
The legal advice we have received is that there is no basis for a legal challenge on why non-legal members are being offered a different type of scheme from their legal colleagues. There is no issue of discrimination, because the different treatment is not based upon any protected characteristic.
The time limit
Members have been given a one-month limit to confirm if they want to be enrolled into NEST.
Many members are concerned that one month is not enough time to consider any potential tax charges or to validate the calculations provided by the MOJ.
The legal advice is that this time limit is set out in the regulations and cannot be extended.
The MOJ is making the minimum level of contribution legally required. You may wish to claim that you would have contributed at a higher level towards NEST. However, it’s likely that you will encounter practical difficulties in demonstrating this.
The employer is obliged to contribute no more than the legal minimum.
Lost investment income
Members have said that they have lost investment income on account of the delay in agreeing access to NEST. While this may be true, the fact that the MOJ is meeting both employee and employer contributions would offset any losses.
Members have said they would prefer to opt out of NEST and be compensated separately for this.
The legal advice given to us is that if you opt out, you are choosing not to take benefits and you are not entitled to recover the contributions. There is no claim for any other compensation as none would have been available had you been offered access to the scheme in real time and chosen to opt out.
Enhanced or fixed protection
The MOJ FAQs have not been clear on if the contribution will be credited from April 2021 and only affect any enhanced or fixed protection from that point. Or, whether contributions will be backdated and credited from 2012 onwards and as such protection will have been lost already.
We are querying this directly with the MOJ. Given the limited time frame available to you to opt out and be treated as if you had never contributed to the scheme, you may need to seek advice from an independent financial advisor and take the appropriate action to secure your position.