Ex-nuclear workers say govt should pay '£182m pension loss'
Former nuclear workers are urging the government to honour pension promises they claim were made when the industry was privatised two decades ago.
According to the campaign launched on 14 July, more than 3,000 pensioners from the UK Atomic Energy Authority (AEA) Technology scheme lost on average one-third of their pension entitlement. They allege this was down to government and regulatory failure, resulting in the scheme being taken over by the Pension Protection Fund (PPF) in 2012.
The campaigners estimate the total shortfall in their pensions is £182m, as a result of losing indexation accrued before April 5 1997 under the PPF cap, and call on the Parliamentary and Health Service Ombudsman to investigate what happened and recommend compensation.
In September 1996, the commercial arm of the AEA was floated on the stock exchange. The AEAT Pension Scheme was set up with a new company called AEA Technology as the sponsor. The Atomic Energy Authority Act 1995 detailed the conditions for privatisation of AEAT and included specific provision for the pension arrangements of transferring staff. This included a "statutory duty and statutory reassurance" to provide a pension scheme that was "no less favourable" than the UK AEA scheme".
Prospect negotiator David Luxton said: "The AEAT scandal is as financially ruinous as the BHS debacle but it was public bodies that were at fault in this case. Critical facts were concealed from employees during the privatisation of AEA Technology in 1996.
"Complaints to relevant government departments, ministers, scheme trustees, the PPF and submissions to the Work and Pensions Committee and the Pension Ombudsman have fallen on deaf ears."
This matter was addressed in parliament last October when Sir Oliver Letwin led a discussion about whether members of the AEAT Pension Scheme understood enough about the consequences of changing schemes.
He accused the Government Actuary's Department of not warning workers who transferred into the private scheme that they risked losing their accrued rights if AEA Technology went bust.
Letwin also suggested that the issue could be investigated by the Parliamentary and Health Service Ombudsman.
However in his response to Letwin, former pensions minister Richard Harrington said the government rejected the accusation that it gave advice to former workers at the AEA when it was privatised in 1996.
To ensure that other workers do not suffer a similar ordeal, the pensioners are also calling for the PPF to be reformed.
Luxton added: "Compensation levels in the PPF are too low in many cases. This is often because of discriminatory treatment of how pre-1997 accruals are indexed.
"PPF compensation should as far as possible match pension promises, particularly those made by the government. PPF compensation should include promised indexation on pension accrued before 1997."
More on Defined Benefit
Trustees have 'false confidence' in their scheme strategies
Nearly every trustee is confident of the next stage in their scheme’s strategy, despite almost an equal number being forced to consider replacing plans within the prior 12 months, according to research by Barnett Waddingham.
Companies overstate liabilities by £60bn amid Covid deaths
Companies could be overstating their pension liabilities by up to £60bn due to their life expectancy assumptions, according to XPS Pensions Group.
Updated: Landmark GMP ruling 'significant challenge' for schemes
Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment said last week.
FCA must stop DB transfer history repeating
Regulators must act now to impose some "proper regulation" to stop another defined benefit (DB) transfer advice disaster, saysTim Sargisson.
DB funds as an economic lever could derail schemes from responsibilities
Opportunities for defined benefit (DB) schemes to pursue investment approaches that help repair the UK’s economy cannot stand in the way of improving member outcomes, Aegon says.
