DWP – AEA PENSION SCHEME – 26 October 2016

[Sir Oliver Letwin: ...  in 1996 when the United Kingdom Atomic Energy Authority was spinning off what became AEA Technology, a new pension scheme was created for that company. The employees concerned had been employees of UKAEA and had benefited from a Government-backed pensions scheme there. They were offered the choice either to remain in the existing scheme or to transfer, on two possible bases, to the AEA Technology scheme.

The sequel, which is also well known to everyone present, is that unfortunately the AEA Technology final salary scheme, like many other such schemes, came a cropper and, when AEA Technology went bust, the scheme turned out to be in massive deficit, so my constituents, and I suspect those of other hon. Members present, found themselves in the hands of the Pension Protection Fund, which – thank goodness – had been set up to deal with such matters. In that respect, they are in no different position from many other people who have suffered a similar fate.

Stephen Crabb: I thank my right hon. Friend for giving way so early in the debate. He is summarising his case exactly right. Is it not the case that, when the pension holders transferred to the new scheme, they were given strong assurances that they would continue to enjoy benefits identical or “very close to” – that was the wording in some of the literature that they were given – those they had under the Government-backed scheme?

Sir Oliver Letwin: I am grateful to the former Secretary of State for Work and Pensions, my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb), with whom I have dealt on various occasions in even more vexed circumstances. He is absolutely right. The gist of what I am talking about is the advice these pensioners were given at the time they decided to make the transfer. I will go into that in some detail in just a moment.]

Dr Julian Lewis: I thought I would get this in now before my right hon. Friend gets into his flow. My constituent, Dr Keith Brown, wrote to me quite some time ago, saying:

“Our main complaint is that official information provided to us at the time of privatisation did not tell us that the new pension scheme was at a much greater risk of failure than our old UKAEA scheme.”

That seems to be the nub of the problem: what they were and were not told.

[Sir Oliver Letwin: My right hon. Friend is absolutely right: that is the nub of the problem – and the nub of the solution is related...]