Article - AEA Technology

THIS week I opened a debate in the House of Commons on the strange case of the advice given to members of the AEA Technology pension scheme.

I have been involved with constituents who are members of this pension scheme for several years. This is an issue that just won't go away.

The details are complicated. But the essence of the matter is very simple.

In 1996 when UKAEA was privatised, its highly-skilled professionals were given options, so far as their pensions were concerned. They could keep their existing public sector pensions, or they could transfer to the pension scheme run by the new private sector company, AEA Technology.

Their new employer, AEA Technology, made it sound as if the new pension scheme would be rock-solid. But the employees who transferred to it later discovered that this was baloney.

When the company went belly-up, the pension scheme had a massive deficit and the employees are now eligible for the much-less attractive pensions offered by the Pension Protection Fund.

But the real issue is that the employees took comfort from another source. In November 1996, they received advice from the Government Actuary which completely failed to point out that the UKAEA scheme was Government backed and, therefore, as safe as anything in the UK, whereas, by contrast, the AEA Technology scheme was exposed to significant commercial risks - which in the event, were realised.

Amazingly, the Government Actuary particularly obscured this vital difference by telling employees explicitly "it is unlikely that the benefit promise made by either the UKAEA Scheme or the AEAT Scheme would ever be broken".

Clearly, this advice was at best misleading. Equally clearly, that is a case of maladministration.

So the Parliamentary Ombudsman should deal with it and - as in the case of Equitable Life - require the Exchequer to establish a scheme of payment proportionate to the degree to which this maladministration was responsible for the losses incurred by the employees.

But the Ombudsman cannot do so. And why not? Because the law doesn't give the Parliamentary Ombudsman power to rule on the actions of the Government Actuary's Department.

There is, in short, a gap in the law. I'm sure that my debate will not fill that gap. But I'm equally sure that by the end of this Parliament we will have brought that result about.