AEA Technology Pension Scheme

Torsten Bell Excerpts

Thursday 26th February 2026 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)]

I congratulate the hon. Member for Didcot and Wantage (Olly Glover) on securing today’s debate, and endorse his opening remarks about the general importance of pensions. We should all think that, but Pensions Ministers should certainly endorse wholeheartedly what he said. He and I have discussed this issue on a number of occasions, and he has spoken clearly and passionately about it today, as always. We all absolutely understand why it has such resonance, particularly for his constituents.

I express my sympathy for all the AEAT pension scheme members. All of us would hate to see our employer enter administration and our pension scheme enter the Pension Protection Fund. I meet a wide range of individuals who have been through that exact experience, and many of them rightly bring the same kind of passion to their cases as he has done. That is particularly true of many of those with pre-1997 accrued pensions, as was the case for many members of this scheme.

The hon. Member is right to say that there was a particular focus on securing better indexation at the point of transfer, so I can understand why these pensioners feel that they have not secured what they had hoped for. It is also particularly true for those with accrued public sector pensions that transferred into private sector schemes at the point of privatisation. We are discussing one of them today, but it is far from the only one—Carillion is obviously the highest-profile case in the recent past. That can no longer happen, given the changes that have been put in place. At the point of privatisation, we will no longer see accrued pension rights transferred into private sector schemes. This is a real issue, but that exact situation cannot occur in future.

As we have heard, this matter has a long and complex history. The company was privatised 30 years ago, in 1996. On the hon. Member’s questions about the value at transfer, the reassurance I can offer—I know it will not be enough for his constituents and others who have raised the case with him—is that the transfer value was agreed by the trustees. It was not proposed by the firm or the Government at the point of transfer, and the financial assumptions that underpinned it were common at the time.

Unfortunately, as we have heard, AEAT entered administration in 2012, which resulted in its pension fund scheme entering the PPF. Of course, that was when the Liberal Democrat and Conservative coalition Government were in office. It is not for me to speak for the coalition Government, who included a Liberal Democrat Pensions Minister, but they responded to the grievances raised by pension scheme members by maintaining that all legal obligations had been fulfilled and that the safety net existed through the PPF. I understand that that is not the position of the hon. Member, but it was the position of the Liberal Democrat and Conservative coalition Government at the time.

The hon. Member has raised two big-picture concerns, to which I will try to do some justice. One is about the income levels that scheme members are living on, which is the most immediate and important thing, and the other is about the consideration of this case by appropriate bodies. On the first of those, AEAT members receive compensation from the PPF, which is a well-established compensation scheme that provides a vital safety net. I do not want to underplay that, because the world before the PPF saw members exposed to much more risk in the case of insolvency. We do not want to underplay the importance of the PPF compensation route, but there have been concerns about the lack of indexation of pensions accrued before 1997, which in this case applies to all the pensions accrued prior to privatisation.

Unlike previous Governments, we have listened to those concerns and are acting. The Government have brought forward legislation in the form of the Pension Schemes Bill, which the hon. Member mentioned. It will introduce annual increases to compensation payments that relate to pensions built up before 6 April 1997 where the schemes provided for this. I can confirm that AEAT members will benefit from the changes to the PPF, because their scheme provided for such indexation, as we have discussed. That will make a real difference in the years ahead by making sure that we do not see further erosion of the value of their pensions due to inflation.

Turning to the second issue raised, the hon. Member is aware that this matter has been considered by a range of different Government and parliamentary bodies since the insolvency in 2012. That includes the Public Accounts Committee inquiry, which he mentioned. All I would say is that the first recommendation of that inquiry was that we address the issue of pre-1997 indexation within the PPF. The answer to his first question is that we have taken those inquiries seriously. That is one of the contributing factors to our acting now, unlike previous Governments, to address the issue of pre-1997 indexation in the PPF.

This issue has been debated twice previously in Parliament, although it is a decade since it was last discussed, so I am sure scheme members will be glad to see the hon. Member bringing it back before Parliament. It has obviously been raised in other debates. Most recently, I have been involved in discussions of it during the passage of the Pension Schemes Bill, during which hon. Members on both sides of the House raised it, including on Report on the Floor of the House just a matter of months ago.

Multiple ombudsmen have considered specific complaints —the hon. Member is right to say that they have considered specific complaints, not the case as a whole—and in the majority of those cases, they have come to a view, not said that it is out of scope. One did such a thing, but in general they have considered the specific complaints raised and brought them to a resolution, although obviously not always in the in the way that some people would prefer.

More generally, my reflection is that I understand the temptation to call for more reviews in this case, because scheme members—and I have spoken to some myself—do not feel fairly treated. I understand that, and it is right that hon. Members come to the House to raise such effects on their constituents in debates like today’s. However, the Government’s view is that the best thing we can do is not to promise further reviews, but to act. The most important way in which we can act, given the circumstances, is by addressing the lack of pre-1997 indexation for AEAT members.

[Olly Glover]

I understand what the Minister is saying about pre-1997 indexation, but that is not the primary issue. The calculations by the campaigners about the difference this makes to their losses is that it is trivial—very small. I do not have the exact percentage, but it is probably a 5% difference, or something along those lines. I am very happy to share that with the Minister. That does not address the key issue, which is that Government guidance was incorrect at the time, and that led people to make decisions on the basis of wrong information. I suggest to the Minister that pre-1997 indexation is a different issue.

[Torsten Bell]

I recognise the point the hon. Member is making, which is that the nature of insolvency and entering into the PPF will have made more of a difference than future PPF accruals. However, had a previous Government—for example, the one that included the Liberal Democrats—introduced pre-1997 indexation a decade back, it would have made significantly more than a 5% difference. That would have made a very large difference to the pensions that AEAT members are living on today.

I am responsible for what the Government are doing about indexation now, and it is a lot more than 5%, because even in just the last years inflation has been running at particularly high levels. I do not agree with the hon. Member’s calculation, but I do agree with him that that is definitely not the entire story. I totally understand that members’ feeling about the advice they received back in the 1990s is at the core of their view that they should never have been in a situation where their pensions were transferred out of the public sector in the first place, and he is right to say that that issue is different from the indexation that occurs within the PPF.

I am merely pointing out that the reviews the hon. Member has mentioned, including that of the Public Accounts Committee, focused on the issue of indexation. My best bet is that, if the Government were not acting on this issue, it would have been one of the issues he raised with us here today, but he is completely right to say that it is not everything. I have said what we are doing to address the lack of indexation: we are acting where previous Governments failed to do so, and acting because we can all put ourselves in the shoes of pensioners who have not seen their pension incomes live up to what they were expecting, through no fault of their own.

Let me close by again congratulating the hon. Member on securing this debate and for giving us the opportunity to speak on such an important subject. I appreciate that I cannot and have not offered everything that he and, indeed, AEAT scheme members would want, but this Government are making real, concrete changes to better protect the pensions of those members from inflation in the years to come. That cannot right all of their feelings about what has happened in the past, but as I say, this Government are choosing to act rather than promising another review in the months and years ahead.

Question put and agreed to.