The Westminster Hall debate on 26 October focused on the nature of the advice given to employees considering whether to transfer the pension they had built up in the UKAEA’s pension schemes to the AEAT Pension Scheme.
AEAT was previously the commercial arm of the UK Atomic Energy Authority (UKAEA). When it was privatised in 1996, its 3,000 or so employees were transferred from the UKAEA’s public sector pension schemes to a private sector scheme sponsored by their new employer.
When they transferred, those employees were given a choice about whether to leave the pension they had already built up before privatisation in the UKAEA’s schemes or transfer it across to their new private sector scheme.
AEAT subsequently entered administration in November 2012 and the pension scheme entered assessment for the Pension Protection Fund (PPF).
Members of the AEAT Pension Scheme saw significant reductions in the value of the pension they had built up as a result of entering assessment for the PPF.
In particular, the value of any pension accrued before April 1997 (including all pension transferred into the scheme from the UKAEA’s pension schemes) was significantly impacted because under the PPF rules, this element of the pension would not attract inflation-linked increases in retirement.
Sir Oliver Letwin MP secured the debate and set out the background to the case and the significant losses incurred by AEAT Pension Scheme members.
However, members of all pension schemes that end up in the PPF suffer losses. Letwin focused on the loss in relation to pension transferred from the UKAEA’s pension schemes and the advice given to people at that time.
He argued that the risk associated with transferring pension rights from the public sector (where it was Government backed and hence secure) to the private sector (where the risk was much higher) was not adequately explained.
He considered that this amounted to maladministration and that the members concerned were entitled to seek redress. Unfortunately there does not seem to be an appropriate avenue for scheme members to raise their concerns in relation to this.
Letwin therefore announced that he was intending to put an amendment to an upcoming Bill to seek to give an Ombudsman the power to investigate these complaints and order compensation if appropriate.
A number of MPs, including Ed Vaizey and Dr Paul Monaghan, also spoke about the losses incurred by the members of this scheme. The fact that several MPs attended the debate indicates widespread support on this issue.
Unfortunately, the Pension Minister, Richard Harrington MP, said the Government did not believe it should compensate members of the AEAT Pension Scheme above what was provided by the PPF.
Harrington did not accept that the advice provided at the time of privatisation amounted to maladministration and said there were avenues open to scheme members to seek redress.