Viscount Thurso (LD)

My Lords, as I move my Amendment 161, I can hear the Minister saying, “Not another review”. I apologise. I say to her at the outset that I recognise how much the Government have done in many of the areas that we have been pushing. Notwithstanding my ingratitude sometimes, that is greatly appreciated. I also appreciate the talks that she has had with me, although I think I am still in the tea and sympathy department and no further forward. This amendment seeks to give effect to recommendation 2 of the PAC report of 2023. The PAC wrote: “The former civil servants who transferred their pensions to AEA Technology … when it was privatised were badly informed by government at the time, with some losing considerable sums”. Its recommendation was: “The government should ensure that members’ complaints about the AEAT pension case can be independently reviewed, for example by a relevant ombudsman”. There is no relevant ombudsman. It would have to be reviewed by somebody else. When I raised this matter in Committee, the Minister said: “I will not go into this in detail, but I am advised that the Government Actuary’s Department note offered to members at the time did not imply a guarantee. The GAD note referred specifically to a risk that the AEAT pension scheme could fail and did not seem to compare levels of risk across the different options. The note was not intended as advice and made it clear that the information provided was not intended to suggest that any one course of action was better than another, and it did not take into account people’s individual circumstances. The note indicated that people should seek their own independent advice”. Since then, I have had the opportunity to get hold of a copy of the GAD note as well as the two brochures that were issued at the time by the UKAEA HR fund. I will go through the points that the Minister made. First, she said that the note did not imply a guarantee. It is correct that the note did not offer a guarantee but, far more importantly, it made no mention of the material change implied by the loss of the guarantee for anything that was transferred into the new scheme. Every professional I have spoken to has said that this is a material and relevant factor that should have been in the GAD note and its omission is surprising. The second point the Minister made was that the GAD note referred specifically to a risk that the AEAT pension scheme could fail. I can find no specific reference to failure in that note other than a statement at paragraph 3.2.3 which says: “The effect of preserving your UKAEA benefits is that your total benefits will be payable from two independent sources. Whilst it is unlikely that the benefit promise made by either UKAEA Scheme or the AEAT Scheme would ever be broken, it is still more unlikely that both promises would be broken, and this could be viewed as a reason to opt for preservation. However, this consideration should not normally outweigh those in relation to salary and inflation”. I would suggest that no one reading that note would consider that a specific reference to a risk of scheme failure. Furthermore, the Minister went on to say that the note “did not seem to compare levels of risk across the different options”.  The note sets out clearly the pros and cons of every option and in doing so makes it very clear how special the special transfer option was. Further, it makes it clear that the personal pension option would be more costly and risky, and at paragraph 3.1.1 specifically advises that transferring to the new AEAT closed scheme was likely to offer the best financial result. It does so in such strong terms that I feel I must quote them: “The main advantage of opting for the special transfer terms are that benefits based on transferred service in the AEAT Scheme are likely to be higher than preserved UKAEA Scheme benefits. This is because the former will be based on your earnings at the time you leave the AEAT Scheme, whilst preserved UKAEA Scheme benefits will be based on your final earnings in the UKAEA Scheme, plus cost-of-living increases thereafter. There are two reasons why your earnings at retirement are likely to be greater than your current earnings plus cost-of-living increases. Both of these reasons apply more strongly the further away from retirement age you are currently. The first reason is that, over the long term, as standards of living increase, general pay levels increase faster than price levels. The second reason is that your pay level may increase further still as the result of performance and promotional awards”. The Minister said that “the information provided was not intended to suggest that any one course of action was better than another”.—[Official Report, 23/2/26; col. GC 306.] It is true that that statement is made at paragraph 1.1.3. However, notwithstanding that statement, if we read the note as a whole, we see that it is pretty obvious that the transfer scheme, which was time-limited, would be the way to go. Finally, the note indicates that people should seek their own independent advice. Again, at paragraph 1.1.3, the note states that “if you are unsure of the most suitable course of action you should seek Independent Financial Advice which would take into account your particular circumstances”. But given that the note had been prepared by the Government Actuary’s Department, was verified by the UKAEA and has pretty unambiguous advice regarding the transfer, I would submit that that statement being qualified by “if you are unsure” renders it meaningless. Having read the documentation, it seems to me that this is a straightforward case of mis-selling. It would not happen today, we know that. The rules have changed—everything has changed. But at the time, insufficient advice was given and people made choices that they are paying for today. The fact that they are paying for those choices is because AEAT went bust, and they should not be treated any differently to everybody else. The fact is that people transferred their pensions. In one case, as I told the Minister, a doctor who worked at the UKAEA and was transferred out to AEA Technology had previously been in the National Health Service. So assured was she by what she had heard that she took her pension from the NHS and put it into AEA Technology, because it was part of the civil service club and remained in it until, I believe, 2002 or 2003.