The High cost of judges: reconsidering judicial pensions and retirement in an ageing population

Most Australian judges are remunerated through a package of benefits that includes salary during their years of judicial service, a judicial pension paid during their years of retirement, and a spousal pension paid to a judge's surviving spouse until the spouse's death. These non-contributory pensions are calculated as a proportion of the current judicial salary and their cost is rising rapidly. The unfunded liability at 30 June 2008 amounted to $586 million for federal judges alone, an increase of 23 per cent on the liability just three years earlier. This article argues that substantial increases in the life expectancy of Australians over the next 40-50 years will impose a very significant strain on the current system of judicial remuneration. This is because the judicial pension and the spousal pension will continue to rise substantially, while the period of judicial service remains constrained; at the lower end, by the need to acquire legal skills prior to judicial appointment; and at the upper end, by mandatory retirement of judges at 70 or 72 years. The article develops two metrics for measuring how the cost of judges changes under different assumptions about their age of appointment and retirement, and under different conditions about life expectancy of judges and their spouses. The article advocates three changes to the law that will help to address the long term pressures of demographic change, namely: (a) increasing the maximum retirement age of judges; (b) increasing the minimum age at which judges qualify for the judicial pension; and (c) increasing the minimum years of service required to qualify for the judicial pension. Consistently with the core value of judicial independence, these changes should be put in place for new judicial appointees only.