UKAEA Public Service Pension Scheme

Tuesday 28th January 2020 Westminster Hall

11:00

[Cat Smith (Lancaster and Fleetwood) (Lab)]

I beg to move,

That this House has considered the UKAEA Public Service Pension Scheme survivor’s pension.

It is a pleasure to see you in the Chair, Mr Gray, for this short but important debate. I requested the debate to highlight the inconsistent and discriminatory application of rules across public sector pension schemes in respect of awarding survivor benefits to unmarried partners upon the death of members. I want specifically to address the refusal of the United Kingdom Atomic Energy Authority pension scheme to award a survivor’s pension to my constituent, Ms Eve Shields, on the basis that she was not married to her partner, Mr Anthony Sysum, at the time of his death in 2017.

Mr Sysum, an employee of British Nuclear Fuels Ltd, was a member of the UKAEA pension scheme for 37 years, retiring in 2005. In a committed relationship for 23 years, Anthony and Eve shared a home and were financially interdependent, and Anthony’s UKAEA pension was their primary source of income. Despite being in poor health herself, Eve dedicated herself to being Anthony’s primary carer following his first stroke in 2006. A subsequent stroke in 2013 left Anthony in a semi-comatose state, unable to communicate effectively and requiring significant nursing care. Sadly, Anthony died in 2017. UKAEA responded to my inquiries regarding Ms Shields’s entitlement to a widow’s pension under the scheme, stating:

“Under the scheme rules, the member has to be legally married or in a civil partnership to be eligible for a dependent’s pension to be paid out after their death. Therefore there is no pension due.”

In July 2019, I wrote to the then Chief Secretary to the Treasury, the right hon. Member for South West Norfolk (Elizabeth Truss), questioning why the UKAEA pension scheme rules appeared to be out of line with more recent reforms to public sector pensions, under which survivor benefits are awarded to unmarried partners and should be paid for life, not removed upon subsequent marriage or cohabitation. In response, she confirmed that the UKAEA pension scheme is based on the civil service classic scheme. New pension arrangements for civil servants introduced in 2002, which are known as premium, were not incorporated into existing classic schemes. As the UKAEA scheme remained a classic scheme, it was not subject to those reforms.

Further examination of the current UKAEA scheme highlights a glaringly inconsistent approach to the rules regarding what constitutes an “eligible widow”. Although a widow’s pension will be awarded to a survivor who was married to or in a civil partnership with a scheme member at the time of their death, that benefit will end should the survivor remarry or live with another person as though they were married.

In 1998, the then Labour Government decided that public service schemes should be able to provide survivor benefits to unmarried partners if the membership was prepared to meet the cost. In October 2002, a new scheme, known as premium, was introduced for new civil service members. The existing classic scheme was closed, with members given the option to transfer to classic plus. The revised classic plus scheme provided, among other benefits, survivor pensions for unmarried partners. The UKAEA scheme is a statutory defined-benefit public service pension scheme, yet it seems that its members were excluded from the reforms made to the range of other civil service pension schemes on which it was modelled. Will the Minister say why?

We know that in 1996, following the privatisation of the commercial arm of UKAEA, members of the existing scheme were offered the right to transfer their benefits from the public service pension scheme to an alternative private scheme, the Atomic Energy Authority Technology scheme, with the promise of “no less favourable” benefits. We also know that that failed, with the AEAT pension scheme transferred to the Pension Protection Fund in 2012 and the Government “promise” in the Atomic Energy Authority Act 1995 subjected to review by the pensions ombudsman. It seems to me that UKAEA members who, like Anthony, chose to remain in the existing public service scheme fared little better, given their exclusion from the opportunity to transfer to a classic plus pension scheme in line with public service employees in other public sector workforces.

Turning to the existing rules, aside from the blatant gender-based language they use, I am incredulous and, frankly, astonished at the position adopted by the current UKAEA scheme. Rule 6.05 of the scheme states:

“A widow’s pension under Rule 6.01 will be paid from the day after her husband’s death until the date of her death, unless she remarries or was (at the time of her husband’s death) living or begins to live with a man as if she were the person’s wife or, if the member died on or after 5 December 2005, the member’s widow forms a civil partnership or marries a woman or begins to live with a woman as though they were a married couple.”

The scheme rules employ a very narrow definition of what constitutes an “eligible widow” in making any widow’s pension award, but the scheme is considerably less narrow in its definition and interpretation of “partnership” when removing that pension at a later date.

It is my view that that position may be considered discriminatory on the grounds of marital status, in line with the 2017 Supreme Court judgment in the case of Brewster. The Brewster case concerned a similar public service pension scheme, the local government pension scheme, and its requirements that unmarried cohabiting partners must be nominated by their pension scheme member partner in order to be eligible for a survivor’s pension, and that the survivor must show they had been a cohabitant for two years prior to, and two years after, that nomination. Neither of those requirements was in place for married or civil partner survivors. The Supreme Court determined that, where a pension scheme provides a survivor’s pension for an unmarried partner, there is no requirement for the member to nominate their partner in order for that pension to be applied.

Denying bereaved cohabitees access to survivor pensions can cause huge distress as well as significant financial hardship. Lawyers acting for Ms Brewster, the surviving partner, responded to the judgment by calling for urgent further reforms and drawing attention to the decision by the Supreme Court that there had been unlawful discrimination on the grounds of marital status. They noted that the rule the Supreme Court had declared unlawful could be found in most of the UK’s public sector pension schemes, potentially affecting around 12 million members in the UK.

In September 2017, in response to a written question, the then Chief Secretary to the Treasury confirmed that Her Majesty’s Treasury had written to all public service pension schemes making clear that the Supreme Court ruling should be applied to all cases similar to that of Ms Brewster. However, in response to my inquiry about my constituent Eve’s opportunity to have the Supreme Court judgement applied in her circumstances, I was informed that that ruling was to be applied only to those public service schemes that provide pensions for unmarried partners. As that does not include the classic UKAEA scheme, Eve remains ineligible.

In summary, the various reforms to public service pension schemes intended to streamline and modernise them to reflect the changing lifestyles of scheme members appear not to have been applied to the UKAEA scheme. That scheme’s rules remain narrow—some may even say patriarchal—in their approach to what constitutes a widow when assessing claims of survivor benefits. However, they seem only too willing to be broader in their understanding of partnership when considering whether any such benefit entitlement should cease.

My constituent Eve, a survivor of a loving relationship with a UKAEA scheme member, is left not only bereaved but financially worse off as a result of the rules. She is now in a financially precarious position, relying on state welfare benefits. Anthony, as a member of a public service pension scheme, should have been afforded the same opportunity as others across public services to transfer to an appropriate scheme providing benefits to unmarried survivors. I would be grateful if the Minister could explain why the UKAEA scheme was excluded from pension reforms that allowed unmarried partners to receive benefits. Does he feel, as I do, that the UKAEA scheme is unfair and discriminatory, given how it is less narrow in defining how a widow can lose a pension than how a widow might be eligible for one?

My constituent Eve is following the debate closely, as no doubt many others will be, too. What advice does the Minister offer Eve and so many others like her who find themselves in this situation? There needs to be urgent action to address the anomalies across public service pension schemes such as that of the UKAEA, and, most importantly, to make right the injustice and discrimination experienced by survivors such as Eve.

11:11

[The Minister for Universities, Science, Research and Innovation (Chris Skidmore)]

It is an honour to serve under your chairmanship, Mr Gray. I thank the hon. Member for Lancaster and Fleetwood (Cat Smith) for calling this debate. I understand that the subject is complex, sensitive and frustrating for a small number of individuals affected, including her constituent, Eve. I pay my greatest sympathies to her on the sad death of Anthony.

I hope it is worthwhile to offer clarification on some of the terms of the UKAEA pension scheme and on the Government’s position, although the hon. Member has already set out eloquently the history of some of the decisions taken. The scheme took on its current form in 1972, based broadly on the terms of the principal civil service pension scheme, which following changes was subsequently known as the classic scheme. These are unfunded public service pension schemes ultimately governed by and adhering to Treasury policy.

We know that the societal circumstances that shaped the scheme’s rules when they were created are significantly different from today, particularly with regard to women in the workplace. Initially, adult survivor benefits were provided only to the spouses of male scheme members, funded by a 1.5% employee contribution. That benefit was extended in 1987 to include the spouses of female scheme members, at which point women began to pay the contribution. The pension for survivors of female members is paid only in respect of reckonable service from that particular date. If the benefit’s scope had been wider—for example, to include unmarried partners —it would have required a higher contribution rate to fund it.

As the hon. Member mentioned, in 2002 the new civil service pension scheme, known as premium, was introduced, which offered a range of important improvements over the classic scheme, including a survivor’s pension for unmarried partners. The classic scheme closed to new members in 2002. She asked about the transfer at that moment. Existing members were given the choice to stay in their current section, to join premium for future service or to join for future service and convert past service to the new terms at a conversion factor of approximately 8% to account for improvements in premium at the time. Those improvements were therefore paid for by an increase in member contributions, making the change cost-neutral to the taxpayer. At that point, members of the classic scheme were offered, as I said, the opportunity to retain their current scheme or join premium. All subsequent civil service pension schemes have included adult survivor pensions for unmarried partners.

The new arrangements were not introduced to the UKAEA pension scheme. Instead, the model analogous to the civil service classic scheme remained unchanged. I understand that the differences between the UKAEA pension scheme and the civil service classic scheme were judged at the time to be sufficient, so a decision was taken that reform was not required. Following the McCloud judgment and the requirements of the Public Service Pensions Act 2013, the UKAEA scheme will close. Timetables are to be determined, following the judgment and the Treasury response. In terms of survivors’ pensions, these remain payable only to spouses and civil partners after 2005. Employees continue to benefit from the lower contribution rate.

It is clear that if an individual’s circumstance changes and the survivor cohabits with a new partner, gets married or enters a civil partnership, the benefit is no longer payable. The employee contribution paid by members was based on those rules and would likely have been higher if they had been different. I know this will disappoint the hon. Member and her constituent, but the Government’s established position is to avoid making any retrospective changes to public sector pensions at taxpayer expense.

The hon. Member mentioned the Brewster Supreme Court case in relation to any possible discrimination. In 2017, the Supreme Court judgment determined that where a pension scheme provides for a pension for unmarried partners on the member’s death, there should be no requirement for the member to nominate their partner for the pension to be paid. The Government believe that that decision has no bearing on cases where pension schemes do not provide pensions to unmarried partners.

As I have said, the Government’s established position is to avoid making retrospective improvements to public service pension schemes at taxpayer expense, other than in very exceptional circumstances, and we do not envisage that policy changing in future. I realise that that does not give the hon. Member the answer that she and her constituent would wish for, but, to follow up her comments, if she would like a meeting with responsible officials in my Department and others, I happily make the offer to sit down with her and go through in greater detail some of the provisions she has mentioned, with the caveat that the Government’s position on retrospective changes remains unchanged. I have liaised closely with the Department for Work and Pensions and the Treasury, and she is aware, having written to the Chief Secretary to the Treasury, that a number of the issues relating to public service pensions are ultimately Treasury decisions.

I thank the hon. Member for raising this case. As a constituency MP, I have dealt with a number of cases where changes have occurred over a number of decades to pension schemes—not the UKAEA scheme in particular—and individuals on previous schemes have sometimes been unable to qualify for particular benefits that came in at a later stage. I recognise the pain and dissatisfaction that her constituent feels with the current arrangements, and I pay tribute to her in coming to the hon. Member as the local MP on this particular issue. On changes enacted over a number of decades, unfortunately I am unable to give the response that the hon. Member would wish for. I am happy to arrange for subsequent meetings to continue the dialogue.

Question put and agreed to.

[James Gray (in the Chair)]

I suspend the sitting until 2.30 pm. The afternoon will open with a particularly interesting debate on Antarctica science and diplomacy led by none other than the hon. Member for North Wiltshire (James Gray).

11:19

Sitting suspended.