Pensions' cap deterring top lawyers from becoming judges says Lord Chief Justice

Updated

George Osborne's decision to impose a £10,000 cap on tax-free pension contributions has had a "very, very serious" impact in deterring high-flying lawyers from becoming judges, the head of the judiciary in England and Wales has said.

Lord Chief Justice Lord Thomas of Cwmgiedd told a parliamentary committee that the cut in the £40,000-a-year cap for those earning over £150,000 in last year's Budget had significantly reduced the financial attractiveness of judicial posts compared with lucrative work in the private sector.

There was "no doubt" that the legal system was "having difficulties" recruiting and retaining judges, and the pension changes - coupled with relatively low pay and increasing volumes of work - were acting as "very substantial deterrents" to joining the bench.

Lord Thomas told the House of Lords Constitution Committee that the disparity between pay in the private and public sectors had "magnified" over the past eight years as London consolidated its place as the world's pre-eminent legal centre.

While an "immensely prosperous" private sector saw fees rising and work flowing in, publicly-funded judges were suffering "very considerable pay restraint", he said.

And he added: "Last year was, I think, the most difficult in that the unintended effect of the decision of the Chancellor of the Exchequer to restrict tax relief on pensions to a maximum of £10,000 a year has had a very, very serious effect on the judiciary, particularly at the High Court level and above, and to circuit judges.

"The result is that a new High Court judge will have a pension, at the end of the day, that is materially less than a district judge.

"This inevitably, combined with the differentials that have magnified over the past eight years, has made attracting people more difficult."

A barrister in private practice was able to respond to Mr Osborne's reform by transferring savings away from pensions and into alternative investments promising better returns, but this option was not available to judges, said Lord Thomas.

"We are paid on the basis that we get a salary and we get a pension," he explained. "But if you can't take the pension because the fiscal effects are so large, you will get no compensation for that.

"The effect of the tax changes on the judiciary has been that what has been regarded always by people coming to the bench as a very important part of the remuneration package has, through fiscal means which I am sure were unintended, produced this effect."

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