AEA Pension Scheme

Paul Monaghan Excerpts

Wednesday 26th October 2016 Westminster Hall

[Dr Paul Monaghan (Caithness, Sutherland and Easter Ross) (SNP)]

I congratulate the right hon. Member for West Dorset (Sir Oliver Letwin) on winning this debate. He has provided a detailed analysis of the issues impacting on the lives of many people in Scotland and elsewhere who are AEA Technology pension scheme members.

We know that AEA Technology was formed in 1996 as a privatised offshoot of the UK Atomic Energy Authority. Crucially, we also know that the Atomic Energy Authority Act 1995 detailed the conditions for AEAT’s creation, including specific provision for the pension arrangements of transferring staff. Those specific arrangements included a statutory reassurance and statutory duty to provide a pension scheme that was “no less favourable” than the UKAEA scheme. In November 1996, the Government Actuary’s Department issued a note outlining the choices available to members of the UKAEA scheme: to leave their preserved benefits in the UKAEA pension scheme, which as we have heard was a public service pension scheme; to transfer them to the AEAT scheme; or to purchase a personal pension. According to evidence submitted to the Pensions Ombudsman Service, the Government Actuary’s Department not only highlighted the three options that I have just noted, but specifically stated at the time that it was unlikely that

“the benefit promise made by either the UKAEA scheme or the AEAT scheme would ever be broken.”

Sadly, the companies that made up the AEA Technology group did fail and went into administration in November 2012. At that time, the AEAT pension scheme entered a Pension Protection Fund assessment period. The PPF was set up under the Pensions Act 2004 to provide compensation to members of defined-benefit pension schemes that wind up underfunded on the insolvency of the employer. Unsurprisingly, because of all this, AEA Technology pension scheme members now feel very aggrieved and misled by the advice that they were given by the UK Government.

It is clear that the UK Government are now abrogating their responsibilities towards the AEA Technology pension scheme members. It is equally clear that the circumstances surrounding the information provided by the Government Actuary’s Department at the time of the transfer, or the lack thereof, warrant thorough investigation in the light of AEA Technology being unable to meet its commitments. That could perhaps be undertaken by the ombudsman, as suggested by the right hon. Member for West Dorset.

Sadly, this affair is another in a long line of pension crises facing UK taxpayers in the last few years. They range from BHS, through the Scottish and Northern Ireland Plumbing Employers’ Federation and the civil nuclear constabulary, to the Women Against State Pension Inequality campaign and more. Indeed, many people affected by the AEA pension scandal are also affected by the arbitrary changes in the retirement age. That is a completely different take on the “pensions triple lock” of which the UK Government have boasted.

It would be helpful and honest for the UK Government to reinstate AEA Technology pension rights as promised by the Government at the time of privatisation and to launch immediately a thorough investigation into the pre-pack insolvency of AEA Technology that will scrutinise the roles of interested parties, including the Pensions Regulator, the PPF and the trustees. Pensions are a contract, not a benefit. Those who pay in deserve to receive their promised entitlement, and it is the responsibility of the UK Government to secure that entitlement and provide dignity in retirement to AEA Technology scheme members.