Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to make provision to enable a Parliamentary and Health Service Ombudsman to investigate advice given by the Secretary of State and the Government Actuary relating to transfers of pensions from the United Kingdom Atomic Energy Authority pension scheme to the AEA Technology pension scheme; and for connected purposes.
This is the main event of the parliamentary day. I welcome many of the people who have supported this Bill. Many of those in the Chamber today, from all parties, have played a crucial role in trying to get justice for the AEA Technology pensioners. I would like to begin by briefly recapping the case of those pensioners.
In 1996, the then Conservative Government privatised the commercial arm of the UK Atomic Energy Authority, then based at Harwell in my constituency, and it became AEA Technology plc. As part of the privatisation, most of the staff who were transferred to AEAT were persuaded to transfer their past pension service, accrued under the Government’s scheme under the UK AEA pension schemes, into the new defined benefit AEAT pension scheme, a private pension scheme. You can guess what happened next, Madam Deputy Speaker. Although it did not happen immediately, some 25 years later, AEAT went into pre-pack administration and disposed of its pension liabilities. The pension scheme went into the Pension Protection Fund in July 2016, meaning that pensions accrued before 6 April 1997 are frozen.
AEAT pensioners among my constituents, and those of many other Members, maintain that they were influenced by incomplete, misleading advice provided by UK AEA and the Government Actuary’s Department. They have therefore rightly been fighting a campaign to right that wrong by reinstating the pension rights that were promised to them at the time of privatisation. Over 3,000 pensioners were affected by that advice and some of them are here today. The hon. Member for Oxford West and Abingdon (Layla Moran), who is not here, and I continue to represent the bulk of the pensioners, but they now reside all across the country, which is why several of my hon. Friends are present.
Some pensioners have lost about 10% of their pension, but the cumulative impact for many will be that their pensions decline by between 30% and 50% over time. That is a clear injustice. 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. The advice given to them in 1996 was that the private sector scheme would be no less favourable than the public sector scheme.
As the advice from the Government Actuary’s Department was written down, we are able to review it today. It issued a paper that discussed transfers from the superannuation scheme—the Government scheme—to the private scheme. In section 3 of that paper, the Government Actuary’s Department listed what it describes on the contents page as the “Advantages of preserving”, which means the advantages of staying in the old Government scheme. Another section describes the
“advantages of taking a special transfer value”,
meaning the advantages of moving to the private scheme. The first strange thing about that is that section 3, in which the Government Actuary’s Department lists the
“Factors to consider in making the decision”,
in particular describing the advantages of preserving the scheme benefits and looking at what might influence the employees to remain in the public sector scheme, states that
“it is unlikely that the benefit promise made by either the UKAEA Scheme or the AEAT Scheme would ever be broken”.
It went on to say that it is even more unlikely that both promises would be broken.
My constituent, Derek Whitmell, has been assiduous in digging out information from various organs of Government. He has a letter from the Government Actuary’s Department, dated 14 November 2014, which states:
“We have found no specific record on file of the underlying justification”,
for the statement I just quoted about broken promises. Pensioners were told that a transfer would not be detrimental to them and that it was unlikely that being in the private sector scheme would have any impact on them. However, the then Pensions Minister, Steve Webb, put forward many hypotheses when responding to a debate in 2015, including the possibility that the company could go into insolvency. I am not saying the Government should be responsible for the investment decisions of AEA Technology, but it is clear that the risks were hidden from pensioners at the time.
Thanks to other FOI requests from my constituent, we have been able to examine how the advice was originally drafted. One astonishing paragraph from AEA Technology states:
“We believe the general tone of this note is likely to discourage people from transferring to the AEAT scheme”
—the private scheme—
“while recognising that the note must be as neutral as possible we do not think this is the case and have suggested a few places where the tone could be modified.”
In plain English, to me that means, “Slant the advice to encourage people to transfer.” It is therefore hardly surprising that 90% of pensioners transferred to that scheme. I remind the House that these people were highly trained research scientists and physicists—not only the kind of people that one would expect to read the small print, but those who would trust authoritative Government advice.
The pensioners have long been pushed from pillar to post. I went to the Secretary of State for Work and Pensions and the Pensions Minister before the 2015 election. I went to the then Secretary of State for Business, Innovation and Skills and was told to go to the ombudsman. A full complaint was made to the ombudsman, who decided not to take any action, and part of the reason for that is because they are not able to review the advice of the Government Actuary’s Department. At the heart of all this is a plain and simple fact: my constituents and others were misled in the advice that they were given, but they have no means of legal redress under the current ombudsman arrangements. I am therefore extremely grateful to my colleagues who have worked hard to try to address the injustice, in particular my hon. Friend the Member for Mole Valley (Sir Paul Beresford) and my right hon. Friend the Member for West Dorset (Sir Oliver Letwin) for their help in drafting the Bill.
The Bill is designed to right a wrong that has been dogging these pensioners for years. Indeed, this issue has been dragging on for so long that we have been debating it for some five or six years. Speaking on the pensioners’ behalf, Tony Reading, chair of the AEAT Pension Campaign, said:
“We were mis-sold a risky pension scheme. Since 2012 we have been seeking restoration of the inflation proofing of our pensions, for which we paid 30% higher contributions. Our previous employer, and the DWP, BEIS, and the Pensions Ombudsman refused to consider our complaint. We were referred to the PHSO who said they could not consider our complaint because the law did not permit it. We hope to get the law changed and our complaint properly investigated. We just want the pension that we paid for, in good faith, for all of our working lives. We hope that MPs will support this Bill.”
Those thoughts were echoed by the union Prospect, which continues to represent a number of the pensioners:
“Our members in AEAT were clearly misled over the decision to transfer their accrued pension benefits and we have fought a long campaign for justice. This Bill is an important step towards righting this wrong, and we hope that it finds support from MPs and from the Government.”
The pensioners, their union and I thank hon. Members for their support and I hope that the Bill will continue to receive support should it receive a Second Reading.
Question put and agreed to.
That Mr Edward Vaizey, Richard Benyon, Sir Paul Beresford, Robert Courts, Stephen Crabb, Annelise Dodds, John Howell, Sir Oliver Letwin, Layla Moran, Victoria Prentis, Dr Sarah Wollaston and Mohammad Yasin present the Bill.
Mr Edward Vaizey accordingly presented the Bill.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 400).