Recommendation 5

When the Atomic Energy Authority Act 1995 was introduced to facilitate the privatisation of AEAT and outline the pension arrangements, it required that the pension benefits in the new AEAT scheme must be “no less favourable” than the previous scheme. Around that time, other privatisations had included government guarantees on their pensions. Ministers also gave assurances in Parliament that pension benefits would be fully protected in the new scheme.5 We asked DWP and GAD how the AEAT pension scheme’s terms could be no less favourable if, as became clear after 2012, it did not have the protection of a government guarantee. The departments told us their understanding was that the phrase “no less favourable” used in legislation referred only to the pension 1 Comptroller & Auditor General, Pensions transferred to AEA Technology when it was privatised, Session 2022–23, HC 1169, 3 March 2023 2 ATC0023; C&AG’s Report, paras 2, 9 3 C&AG’s Report, paras 10–11, 1.5 4 C&AG’s Report, paras 12–14 5 C&AG’s Report, para 1.5, 1.10 8 AEA Technology Pension Case scheme benefits, not their security, meaning the 1995 Act did not provide for a public sector guarantee on the scheme. GAD said that it was on this basis that it will have certified that the new pension scheme met the terms of the 1995 Act.6