The High Cost of Judges: Reconsidering Judicial Pensions and Retirement in an Ageing Population
| Published date | 01 March 2011 |
| Date | 01 March 2011 |
| DOI | http://doi.org/10.22145/flr.39.1.2 |
| Subject Matter | Article |
THE HIGH COST OF JUDGES:
RECONSIDERING JUDICIAL PENSIONS AND RETIREMENT
IN AN AGEING POPULATION
Brian Opeskin*
In recent years there has been unprecedented concern about the impact of population
change on Australian society. The concerns come from different quarters.
Commentators have va riously remarked that fertility is too low, immigration is too
high, the population is ageing too rapidly, and that uneven spatial distribution is
placing too great a burden on the infrastructure of already crowded cities. A s further
evidence of the growing interest in population dynamics, in 2010 the Australian
Government created a new office of the Minister for Sustainable Population to help
guide the development of policies to meet Australia's future populatio n needs.
These are important issues in a national population debate, yet demographic
change also affects specific workforces in specific ways, and this has led to a new
interest in workforce planning.1 This article examines how demographic change is
likely to affect one aspect of the Australian judicial system in the future, namely, the
cost of judges. This is an important issue because judges — while clearly essential to
maintaining the rule of law in a liberal democracy — are an expensive human
resource. A better understanding of the impact of population dynamics on the cost of
judges can promote transparency and accountability in the expenditure of public
money and inform policy choices about pension arrangements and retirement a ges. It
may also help in assessing the costs and benefits of alternative dispute resolution
mechanisms as substitutes for court-based adjudication.
The principal argument of this article is that substantial increases in the life
expectancy of Australians over the next 40–50 years will impose a very sig nificant
strain on t he current system by which judges are remunerated. This is because the
pension payable t o a judge during his or her retirement, together with the pension
payable to the judge's surviving spouse, will continue to rise substantially, while the
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* Professor of Legal Governance, Macquarie University. I would like to thank Rebecca Kang
for research assistance. I have had the benefit of advice from judges, demographers and
economists in undertaking this research. I am particularly indebted to Ross Chapman,
Rebecca Kippen, Nick Parr and two anonymous referees for their incisive comments on a
draft of this article. Any remaining errors are mine alone. An embryonic version of this
article was presented at the Australasian Law Teachers Association Conference in
Auckland, 4–7 July 2010.
1 Jacob S Siegel, Applied Demography: Applications to Business, Government, Law, and Public
Policy (Academic Press, 2002) 330–95; Julie Sloan, The Workforce Planning Imperative (Julie
Sloan Management Pty Ltd, 2010).
34 Federal Law Review Volume 39
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judicial service that the judge can render is constrained by mandatory retirement at 70
or 72 years of age. To illustrate the extent of the future challenges, the Australia n
Government Actuary estimated that the unfunded liability of all federal judges under
the current pension scheme amounted to $586 million at 30 June 2008 — an increase of
23 per cent on three years earlier.2 This article advocates three changes to legal policy
that will help address the long term pressures of demographic change, na mely,
increasing the maximum retirement age of judges, increasing the minimum age at
which judge s qualify for the judicial pension, and increasing the minimum length of
service required to qualify for the judicial pension.
The article focuses on the cost of judges in the federal judicial system and
frequently refers to the experience of the Federal Court of Australia. The Federal Court
is a useful example because it is a relatively large cou rt comprising about 50 judges, it
operates nationally, and data about its operatio ns are readily available. However, the
conclusions apply to all Australian courts that have a similar remuneration framework.
Arrangements for t he remuneration of judges are broadly similar across all Australian
jurisdictions except Tasmania, but important variations will be highlighted if they
affect the extent to which the arguments can be generalised beyond the fed eral system.
The article is structured as follows. Part 1 examines the demographic ev ents that
make up the 'life course' of a typical judge, with particular focus on appointment to
judicial office and termination of that office. Part 2 considers the principal financial
costs associated with a judge's appointment, namel y, salary, judicial pension and
spousal pension. Part 3 then analyses how the three elements of cost interact with the
demographic events that constitute a judge's life course. This is done, first, by
focussing on three paradigms that represent potential best-case and worst -case
scenarios and, secondly, by developing two metrics to quantify how the cost of judges
changes under different assumptions about the age of appointment and termina tion.
Part 4 charts the remarkable rise in the life expecta ncy of Australians over the past 100
years and discusses the further improvements in life expecta ncy that are projected over
the next 5 0 years. The impact of these changes on the cost of judges is then examined.
Part 5 considers the implications of the analysis for reform of law and policy. The
article concludes by making the three recommendations for change outlined above.
1 A JUDGE'S LIFE COURSE
A proper understanding of the cost of judges requires knowledge a bout those events in
the personal and professional life of a judge that have a bearing on salaries and
pensions. These events form part of a judge's life course, and a demographic analysis
of those events would address issues of timing (when do they occur?), sequencing (in
what order do they occur?), and quantum (how many events occur?). 3
For present purp oses, the most important life course events are birth, admission to
legal practice, taking silk, judicial appointment, judicial termination, and death. Not all
events happen t o every judicial appointee. For example, while a majority of judges
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2 Australian Government Actuary, The Judge's Pension Scheme: A Report on the Long Term
Costs, Carried Out by the Australian Government Actuary Using Data to 30 June 2008
(Australian Government Actuary, 2008) [7.2].
3 Francesco Billari, 'Life Course Analysis' in Paul Demeny and Geoffrey McNicoll (eds),
Encyclopedia of Population (Macmillan Reference, 2003) 588, 588.
2011 The High Cost of Judges 35
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have had their senior status at the bar recognised by taking silk prior to their elevation
to the bench, this is not universally true. Conversely, some event s may happen more
than once: a sitting judge may be appointed to a higher court, resulting in two
appointments and two terminations. Moreover, some events may occur
simultaneously: a judge who dies in office brings together termination and death in a
single point in time.
The relationship between the life course events can be visualised using a Lexis
diagram, which is the invention of the German actuary and statistician, Wilhelm Lexis
(1837–1914). The horizontal axis records calendar time in years and the vertical axis
records an individual's age in years. Each judge has a lifeline repr esented by a diagonal
that rises to the north-ea st at 45º. Figure 1 shows the lifeline of a hypothetical judge
(solid line AF) who was born in 1940, was admitted to legal practice in 1965 at age 25,
took silk in 1980 at age 40, was a ppointed a judge in 1990 at age 50, retired in 2010 at
age 70, and (prospectively) dies in 2020 at age 80. The Lexis diagram can be populated
with other judicial lifelines, representing the demographic experience of a whole court
or an entire nation, thus summarising the life course history of a population of judges.
Figure 1:
Lexis diagram showing a typical life course of a male judge and hi s spouse
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