Recommendations & Conclusions
7 items
2
Recommendation
Fifty-Seventh Report - AEA Technology P…
Rejected
AEAT pension scheme members have been passed from one part of government to another, with no department taking overall responsibility for their complaints. Scheme members have raised complaints with government since 2012 covering a range of issues that involve several government organisations, including departments and regulators. The Department for Work …
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AEAT pension scheme members have been passed from one part of government to another, with no department taking overall responsibility for their complaints. Scheme members have raised complaints with government since 2012 covering a range of issues that involve several government organisations, including departments and regulators. The Department for Work & Pensions (DWP) initially responded in 2013 on behalf of government by providing a factsheet, which summarised the complaints received and the government’s position on each. Six months later, after members were dissatisfied with the response, DWP wrote to them again saying it was not responsible for the case and directing them elsewhere. DWP had to subsequently apologise for the fact that its factsheet added to the confusion over who was responsible for what. Responsibilities for pensions are spread across government, with different departments responsible for private and public sector pensions. The lack of joined-up thinking on pensions allowed the issue to fall between the cracks. Government has not commissioned any independent review into the complaints raised by AEAT members, and all of the relevant ombudsman services have said they cannot investigate the information government provided in 1996. Recommendation 2: The government should ensure that members’ complaints about the AEAT pension case can be independently reviewed, for example by a relevant ombudsman.
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Government response AI summary
The government disagrees with the recommendation, stating that complaints have already been considered by ombudsmen whose remits are statutory policy matters. It adds that the 2013 Fair Deal policy prevents similar situations from arising again.
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HM Treasury
1
Conclusion
Fifty-Seventh Report - AEA Technology P…
Rejected
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Work & Pensions (DWP), the Government Actuary’s Department (GAD) and the Parliamentary and Health Service Ombudsman (PHSO) on the pensions transferred to AEA Technology (AEAT) when it was privatised.1
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On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Work & Pensions (DWP), the Government Actuary’s Department (GAD) and the Parliamentary and Health Service Ombudsman (PHSO) on the pensions transferred to AEA Technology (AEAT) when it was privatised.1
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Government response AI summary
The government disagrees, stating that Pension Protection Fund indexation rules are set out in legislation and changing them would require a change in law, which is a policy matter.
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HM Treasury
8
Conclusion
Fifty-Seventh Report - AEA Technology P…
Rejected
Since the scheme entered the PPF, members have lost money in real terms each year because the compensation they receive does not include rises for inflation. PPF compensation initially provides members 100% of their pension if they had already reached the scheme’s normal pension age, or 90% for those who …
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Since the scheme entered the PPF, members have lost money in real terms each year because the compensation they receive does not include rises for inflation. PPF compensation initially provides members 100% of their pension if they had already reached the scheme’s normal pension age, or 90% for those who had not. Compensation on pensions earned after 6 April 1997 increases each year in line with inflation, up to a maximum of 2.5%. However, benefits accrued before 6 April 1997, including all benefits transferred in 1996, are not increased for inflation at all.13 Scheme members who wrote to us described the damaging effects of the loss of inflation protection on many years of pension benefits, in one case losing over 40% of their pension in real terms.14 We asked 6 Q 2 7 C&AG’s Report, para 1.10 8 Qq 15, 20, 23–26, 53 9 Q 32; C&AG’s Report, para 1.9 10 Q 33; C&AG’s Report, para 1.11 11 Qq 52, 54–55 12 Q 54; C&AG’s Report, para 1.13 13 Q 79; C&AG’s Report, para 2.6 14 ATC0001; ATC0004; ATC0016; ATC0022 AEA Technology Pension Case 9 DWP whether the mechanism used to provide restitution for Equitable Life pensioners could be used in this case. DWP was unable to comment on any comparison to Equitable Life, but responded that the PPF was the mechanism government had set up to provide compensation in cases such as AEAT’s.15 The government’s response to complaints
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Government response AI summary
The government rejects the recommendation, stating that changing the Pension Protection Fund indexation rules would require legislative change and is therefore a policy matter on which they cannot respond further.
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HM Treasury
9
Conclusion
Fifty-Seventh Report - AEA Technology P…
Rejected
From 2012 onwards, scheme members raised a series of complaints with multiple government organisations and were dissatisfied with the responses they received. 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 …
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From 2012 onwards, scheme members raised a series of complaints with multiple government organisations and were dissatisfied with the responses they received. 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.16
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Government response AI summary
The government rejects the conclusion, stating that complaints were already considered by relevant government bodies. They indicate that changing an ombudsman's remit is a policy matter, and existing 2013 Fair Deal policy prevents similar circumstances from reoccurring.
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HM Treasury
10
Conclusion
Fifty-Seventh Report - AEA Technology P…
Rejected
When we asked it why no part of government had taken responsibility for the issue, DWP described pensions policy as a complex and wide-ranging area which touches on a number of departments. DWP is responsible for private sector pensions rather than public sector pensions, which it told us are the …
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When we asked it why no part of government had taken responsibility for the issue, DWP described pensions policy as a complex and wide-ranging area which touches on a number of departments. DWP is responsible for private sector pensions rather than public sector pensions, which it told us are the responsibility of HM Treasury and the Cabinet Office.17 We asked why DWP initially responded to complaints on behalf of government, before saying it was not responsible and directing members to other parts of government such as the then Department for Business, Innovation and Skills or the Parliamentary and Health Service Ombudsman (PHSO). DWP responded that its factsheet was aimed at answering questions as well as it could by setting out government’s position on different issues. However, DWP acknowledged that the factsheet had not been clear about who was responsible for what, and that it had to subsequently apologise for the fact that the factsheet added to the confusion.18
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Government response AI summary
The government rejects the recommendation, stating that changing the ombudsman's remit is a policy matter and the 2013 Fair Deal policy prevents similar situations from reoccurring.
Read full response →
HM Treasury
11
Conclusion
Fifty-Seventh Report - AEA Technology P…
Rejected
Government has not commissioned any independent review into the complaints raised by AEAT members, and all of the relevant ombudsman services have said they cannot investigate the information government provided in 1996.19 PHSO told us it is unable to investigate personnel and superannuation matters, and that this would require a …
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Government has not commissioned any independent review into the complaints raised by AEAT members, and all of the relevant ombudsman services have said they cannot investigate the information government provided in 1996.19 PHSO told us it is unable to investigate personnel and superannuation matters, and that this would require a legislative change to allow it to look into the issue properly.20 We asked DWP what the Minister of State for Pensions was referring to when he wrote in 2020 that the matter had been thoroughly investigated. DWP told us that the Minister was referring to the large amount of correspondence on the issue and two Westminster Hall debates, rather than any specific investigation or review.21
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Government response AI summary
The government rejects the recommendation, stating that changing the ombudsman's remit is a policy matter and the 2013 Fair Deal policy ensures similar circumstances will not reoccur in the future.
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HM Treasury
12
Conclusion
Fifty-Seventh Report - AEA Technology P…
Rejected
We asked how government can ensure that, if a similar thing were to happen again, pensioners making complaints would not be shunted from pillar to post in trying to make appeals and getting no advice or satisfaction. DWP told us that the government’s Fair Deal policy introduced in 2013 means …
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We asked how government can ensure that, if a similar thing were to happen again, pensioners making complaints would not be shunted from pillar to post in trying to make appeals and getting no advice or satisfaction. DWP told us that the government’s Fair Deal policy introduced in 2013 means that these specific circumstances would be unlikely to happen again, as in cases of privatisation the pensions would now be expected to remain in public sector schemes.22 PHSO said that it would be helpful if government considered ombudsman jurisdictions at the formative stages of policy, to avoid gaps such as these. It 15 Q 79 16 C&AG’s Report, para 3.2, 3.6 17 Qq 28, 32 18 Qq 56–57, 67 ; C&AG’s Report, para 3.9 19 Q 66; C&AG’s Report, para 16 20 Qq 41–43 21 Q 66 22 Qq 31, 68, 80 10 AEA Technology Pension Case also told us it had been working with government departments to produce complaints standards, with an aim to move towards consistent practice in how government handles complaints. PHSO told us that a common theme in its investigations is the need for clear communication of change by government so that people can think properly about the options available to them.23 DWP said it would be careful to ensure responsibilities are set out more clearly in any similar case in future.24 23 Q 74–74 24 Q 67 AEA Technology Pension Case 11 2 Lessons for pensions and financial advice Routes of appeal for complaints about pensions and advice
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Government response AI summary
The government rejects the recommendation, stating that changing the ombudsman's remit is a policy matter and the 2013 Fair Deal policy ensures similar circumstances will not reoccur in the future.
Read full response →
HM Treasury