More than 3,000 pensioners from the AEAT pension scheme lost on average one-third of their pension entitlement because of business, government and regulatory failure that resulted in their scheme being taken over by the Pension Protection Fund in 2012.
This means that the pensions of scheme members are not paid in full, with no indexation of pension accrued before April 5, 1997.
For many, the loss means the difference between peaceful retirement and a retirement beset by worries over future social care for partners.
The campaigners estimate that the total shortfall in their pensions is £182m.
They are calling on the Parliamentary and Health Service Ombudsman to investigate what happened, and crucially, to have the freedom to investigate fully and recommend compensation.
This is in line with the approach advocated by Oliver Letwin, one of the members of Parliament who has supported the AEAT campaigners (1).
Prospect negotiator David Luxton said: “The AEAT scandal is as financially ruinous as the BHS debacle but it was public bodies that were at fault in this case. Critical facts were concealed from employees during the privatisation of AEA Technology in 1996.
“Complaints to relevant government departments, ministers, scheme trustees, the PPF and submissions to the Work and Pensions Select Committee and the Pension Ombudsman have fallen on deaf ears.”
In a bid to ensure that other workers do not suffer a similar fate, the pensioners are also calling for the Pension Protection Fund to be reformed.
Luxton added: “Compensation levels in the Pension Protection Fund are too low in many cases. This is often because of discriminatory treatment of how pre-1997 accruals are indexed.
“PPF compensation should as far as possible match pension promises, particularly those made by the government. PPF compensation should include promised indexation on pension accrued before 1997.”
Other changes that the pensioners want to see include:
- the PPF compensation cap should be removed except to prevent abuse
- the 10% reduction in PPF compensation to be removed
- a review of all privatised defined benefit pension schemes
- reassurance that incorporating the Financial Assistance Scheme into the PPF will not weaken the PPF’s ability to pay compensation.
Download a dossier compiled by the campaigners from: https://library.prospect.org.uk/download/2017/01053
AEAT pension scheme members are available for interview.
Please contact 020 7902 6607 or firstname.lastname@example.org for further information
(1) Hansard HC Deb vol 616 col 160WH (26 October 2016) [https://hansard.parliament.uk/Commons/2016-10-26/debates/6507189F-0F58-4810-9E60-576B861DAAC6/AEAPensionScheme]