The Commons Public Accounts Committee this week published a damning report on a long running pension scandal which has seen retired pensioners lose hundreds of thousands of pounds from their pension pots because of misleading official advice given to them 27 years ago.

The pensioners were all employees of the AEA Technology – the state owned commercial arm of the UK Atomic Energy Authority – which was privatised in 1996 by Sir John Major’s Tory government.

This sorry tale took place almost at the same time as the government had implemented the 1995 Pensions Act which raised the retirement pension for 1950s women from 60 to 65 and the DWP has been found guilty of partial maladministration by Rob Behrens, the Parliamentary Ombudsman.

The Tory government gave AEAT employees just one month to exit their contributory Whitehall pension scheme for a new one with the company taking over AEA. 90 per cent of the staff did.

Crucial to this rushed decision was an independent report by the Government Actuary’s Department which told all staff that the scheme was as good as remaining in the state scheme and might even be better.

What it failed to tell people was that if the company went bust or the pension scheme failed all the staff would lose their guaranteed protection of their pension savings that is provided by the government. It would be transferred to the Pension Protection Fund, lose all their inflation protection up to 1997, and they would live for the rest of their lives with only a 2.5 pc annual increase in their pension.

Government Actuary’s report was secretly changed by UKAEA lobbying

According to the written evidence from an ex employee David Roberts, a freedom of information request has revealed that this ” independent” report was tampered with by AEAT and the UKAEA behind the scenes. They got it rewritten because it was not persuasive enough to get people to quit the government scheme .

He wrote:” The sections which have caused the complaints were significantly changed as the result of a telephone conversation between UKAEA and GAD on 5/11/1996. “

GAD also failed to undertake a risk assessment about the switch.

In 2012 AEAT which had already cut funding to the pension scheme went into administration. The company was bought by Ricardo, an American firm, who immediately divested all its nuclear work .Its headquarters of a new firm are now in California.

One would have thought they sacked employees could get redress but for the last 11 years they have got nowhere.

They are barred from complaining to either the Parliamentary Ombudsman or the Pensions Ombudsman.

Current legislation bars the Parliamentary Ombudsman from looking into case involving private pensions – and the government has just told the Commons Public Administration Committee there is no priority to change the law.

The case could come under the Pensions Ombudsman but there is a 15 year cut off point from when the event happened which blocks him from awarding any compensation.

Nobody in government takes responsibility

As the PAC report says:

“Nobody in government has taken overall responsibility for the case. There has been no independent review because the relevant ombudsman services have said they cannot investigate the information given to members in 1996, clearly highlighting that there are gaps in the routes of appeal people have for complaints about their pensions.”

The response from government since 2012 has been appalling. The DWP not only did not help but confused the issue. The report says: “In July 2013, DWP produced a factsheet summarising the complaints government had received and a response to each on behalf of the government. In February 2014, it then sent scheme members a further letter explaining that it was not responsible for the case.”

But it didn’t tell them who was and it turned out to be the Cabinet Office.

Ministers were no better. Sir Steve Webb, then the Liberal Democrat pensions minister, would not intervene to change any rules to help the pensioners -saying if AEA Technology rules were changed it would affect other government services that had been privatised citing the BT pension scheme. He was actually wrong in this case, it is protected should BT go bust.

Two MPs tried to use private members bills to rectify the situation by changing the Ombudsman’s powers – but they were blocked by the Conservative government.

The government has escaped responsibility by never setting up an independent review of what happened and the Government Actuary’s Department has tried to avoid censure by saying their report was not the main reason why people switched their pension. This is contradicted by the employees who gave written evidence to the PAC.

people abandoned by an uncaring state

The whole saga is simply part and parcel of a government that cares little for the welfare of the ordinary citizen and tries to evade responsibility for its errors. Meanwhile people – who contributed to their pension and even put extra contributions to increase it – are just abandoned by an uncaring state. One person lost 40 per cent of their pension and all are affected by the cost of living crisis since they are not protected by the huge rise in annual inflation by the Pension Protection Fund.

Please donate to Westminster Confidential to allow me to continue my forensic investigations