MP introduces bill to investigate Atomic Energy Authority transfers

The bill, introduced in Parliament on July 21 under a 10-minute rule motion, is intended to expand the remit of the ombudsman, so it can investigate further into the advice given by the secretary of state and the Government Actuary’s Department in this case. 

The dispute can be traced back to 1996 when the commercial arm of the UK Atomic Energy Authority was privatised and a company called AEA Technology was created.

Some 3,000 employees were given the option to transfer to the new defined benefit scheme, the AEA Technology Pension Scheme, where they would get identical or very close to identical benefits to those they were already receiving. Under assurances from the government, a total of 90 percent of workers opted to transfer. 

However, less than two decades later, in 2012, the company went into a pre-pack administration and the pension scheme entered into Pension Protection Fund assessment, being transferred to the pensions lifeboat in 2016. 

Members receiving pensions 35 per cent less

Due to PPF rules — which state that members who have not reached retirement age have their benefits cut to 90 per cent and have a cap on the total amount to be paid each year — pensions are now, on average, worth around 35 percent less than they used to be, Johnston said.

He added: “The GAD produced its guidance having conducted no risk assessment of the new pension scheme that was being created. 

“This was a completely unproven company, and in the light of what happened, the pensioners would have been better with a more cautious note telling them about the possible risks.”

There were also insufficient funds transferred into the scheme when it started, according to Conservative MP Geoffrey Clifton-Brown. "No written agreements appear to have been made to cover such an eventuality,” he said in a parliamentary debate in 2015.

When introducing the bill, Johnston said this case was unique, since scheme members “were assured from the despatch box, in fact, by the minister of the time, 25 years ago, that their terms and conditions and their pensions benefits would be fully protected".

He explained the need for new legislation since the Work and Pensions Committee could not investigate this case, “because it does not involve a group of pensions being affected in the same way — it is not the kind of case that the committee would look into”.

He added: ‘’It is not asking for a large amount of money in compensation, and it is not condemning the GAD. it is a very specifically targeted bill.’’ 

Prospect, who were the main trade union representing staff at AEAT, told Pensions Expert they "support the bill in its long campaign to get justice for pensioners who were unfairly advised".

Former committee chair asked for probe

During his tenure as chairman of the WPC, Frank Field brought further attention to this issue when he wrote to minister for pensions and financial inclusion Guy Opperman in 2018, asking him for this proposal to be included in the government’s upcoming defined benefit white paper. 

According to Field, GAD even provided written information to AEA Technology employees at the time of privatisation in 1996 which "helped reassure many of them that it was safe to move across’’ the pension schemes "on the grounds that the latter scheme was no less favourable’’. 

As a result, Field asked for the government to expand the scope of one of the institutions, so that the information provided by GAD to scheme members could be investigated. 

Former MP Ed Vazey, who now sits in the House of Lords, introduced a similar bill in 2019, which failed to complete its passage through parliament. 

He said at the time: "It is clear that my constituents and their fellow pensioners were misled 20 years ago in the advice on whether to retain their accrued benefits, in what was effectively a government pension scheme, or to transfer them to a private scheme.’’