UKAEA Public Service Pension Scheme

James Gray Excerpts

Tuesday 28th January 2020 Westminster Hall

[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).