A group of MPs have demanded compensation for members of the beleaguered AEA Technology final salary pension scheme.
Speaking in the House of Commons they asked pensions minister Steve Webb for a “proper and thorough” investigation, adding that scheme members “need compensating accordingly.”
The demands were sparked by the company going into pre-pack administration in late 2012 after struggling to cope with its debts and pension scheme deficit.
Conservative MP for the Cotswolds Geoffrey Clifton-Brown told the house that when AEA Technology was formed as a privatised offshoot of the UK Atomic Energy Authority in 1996, members were encouraged to transfer all accrued pension service from the UKAEA scheme.
He said: “Scheme members were assured that their pension would be safe.
“As both schemes were based on final salary, the decision by scheme members on whether to transfer service to the new scheme or to freeze it in the UKAEA scheme was based on a judgment of what would happen to their own salary in future years.
“The pre-pack administration of the AEA Technology pension fund and the information on which members transferred their entitlements need proper and thorough investigation, and scheme members need compensating accordingly.”
However, the AEA Technology pension scheme ran into deficit because of changes in actuarial valuations. It later transpired that insufficient funds had been transferred into it when it started.
He added: “No written agreements appear to have been made to cover such an eventuality.”
Five other Conservative MPs supported the call, including Newbury’s Richard Benyon, Reading West’s Alok Sharma and Oxford West and Abingdon’s Nicola Blackwood.
The Atomic Energy Authority Act 1995 detailed the conditions for the privatisation of AEA Technology and said the benefits from the daughter scheme should be “no less favourable” than those from the UKAEA scheme, as it was at the time.
But Mr Webb said: “I hugely sympathise with anybody who built up pension rights, was expecting a certain pension and then did not get it.
“But the scheme people came out of was essentially a civil service-type scheme.
“That meant the new scheme had to allow people to go on building up benefits that were no less favourable; it did not mean that what was then a private company had its pension deficit, for example, underwritten by the taxpayer indefinitely – it could not have meant that.”
Adviser view
Peter Chadborn, director of Essex-based Plan Money, said he expected there to be more interest in people with defined benefit pots moving their savings as of April’s reforms.
He said: “This illustrates some of the more dangerous transfers that can take place, but with the Financial Services Compensation Scheme and the Pensions Ombudsman there should be sufficient protections now, provided they get advice.”
