AEAT Pension Collapse
AEAT was set up when the UK Atomic Energy Authority (UKAEA) was privatized in 1996.
At the time of the privatization some 3000 employees were transferred from UKAEA to AEAT.
The new company and the government also set up a new pension scheme. One element of that was the 'Closed Scheme' only available to transferring employees from UKAEA. It replicated the benefits in the UKAEA scheme and employees were encouraged to transfer their funds to it. This was intended to protect these public sector pensions.
In fact the Government produced a document, prepared by the Government Actuaries Department (GAD) to which were attached the transfer forms. This document very positively encouraging employees to transfer. The document did in fact cover the pros and cons of the transfer, but each of the negatives raised were dismissed in the document. Specifically the only advantage in not transferring was limited to those who were likely to retire or die imminently. It also stated that the promise to pay the promised pension was unlikely to be broken so should not be considered. The benefits in transferring were gushing. No mention was made that that the Crown guarantees
would be lost on transferring assets to the private-sector scheme; in fact, the document implied (but carefully refrained from stating) the opposite.
In a separate document called 'What you need to know' under the heading 'Is the AEA Technology pension scheme safe?' it said 'there will be a transfer of money into the scheme from UKAEA to cover the benefit liabilities associated with the transferred past service of members'. Presumably this was based upon market conditions at the time and, as we all know, shortly afterwards the markets collapsed and the pension fund was in trouble from that point on, eventually bringing the company to its knees. In other words at the date of transfer it may have appeared that the Government had transferred enough funds to meet its commitment to its public sector employees, but within a few months/years it was clear that it had not.
In addition to all of this the AEAT pension fund also joined the Public Sector Transfer Club which meant that not only had employees transferred their UKAEA public sector pension funds, but also transfers from other public sector funds occurred like the NHS.
As the privatization occurred in 1996 all these transfers are pre-1997 and therefore do not benefit from increases in the PPF. As public sector pensions they had full RPI protection and this has been lost.
If you have been affected by this, do make contact - there are a group of us, all ex-AEAT employees, who are banding together to see if we can get Government to recognise that they have a special obligation to support our pensions. Email to firstname.lastname@example.org in the first instance, and one of us will get back to you.
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