Government and its agents grossly misled us over our pension choices at privatisation
The main deceptions
No one told us that we would be giving up a government guarantee if we transferred our pensions to the new AEA Technology pension scheme.
Government secretly transferred an inadequate sum to the new scheme. It was underfunded from the start.
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We don’t know of any other privatisations where people were misled as we were.
Civil servants who transferred their pensions to AEA Technology were badly informed by the government at the time, with some losing considerable sums."
Public Accounts Committee
What happened?
The AEA Technology pensions scandal began in 1995-96, when the company was privatised out of the United Kingdom Atomic Energy Authority (UKAEA).
Ministers misled parliament about the security of the new AEAT pension scheme: ​​
Numbers in 2025:
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1000 surviving members of the scheme, plus their dependents.
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Pensions they earned pre-1997 are currently 50% less than promised.
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Expected lifetime loss (average per person)
= £85,000 ​
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Employees received misleading and incomplete information from the government and its agents which persuaded 90% of them to transfer the pensions they had built up in the UKAEA scheme into the new scheme. They were assured that it would pay the same benefits.
Why we lost money
When AEAT went into administration in 2012, the pension scheme was in deficit. Pensioners started to receive compensation from the Pension Protection Fund (PPF).
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We paid into the UKAEA scheme for pensions linked to RPI. But PPF gives us no inflation protection at all for the pensions we earned before privatisation! Currently (2025) we are receiving about 50% of the pensions we were promised.
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The 2025 Budget announcement makes hardly any difference to what we can expect in the future.
The Atomic Energy Authority Act 1995
The Authority (UKAEA) scheme included an explicit provision that the government would pay the benefits if the scheme did not. The new AEAT scheme contained no equivalent provision! It was NOT 'no less favourable' and so it did not comply with the Act.​
A 'certificate' from the Government Actuary, advised the Secretary of State that the scheme complied with the Act, but only if "the commitments and undertakings made by AEA Technology plc will be fulfilled”. Of course, as events proved, they were not, and there was no guarantee that they would be!
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The certificate, with these weasel words, was kept secret from employees at the time.​
The Government Actuary's Note (GAD Note) 1996
The Government Actuary prepared an extremely influential document - the ‘GAD Note 1996’. It was unique among privatisations. This Note was given to employees, and it pretended to give them independent information on their pension choices.
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The content was highly misleading, particularly in regard to risk.
What the Note said:
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1.1.1 it “outlines the main factors to take into consideration in deciding whether or not to transfer accrued UKAEA Scheme benefits”
​2.2.4 “your transferred benefits will be identical (or very close) to those you would have received if you had been able to continue [in] the UKAEA Scheme”
3.2.3 “it is unlikely that the benefit promise made by either the UKAEA Scheme or the AEAT Scheme would ever be broken”
What the Note did NOT say:
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The UKAEA pension scheme was backed by the Treasury but AEAT's did not have any such government guarantee.
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The “no less favourable” pension required by the AEA Act 1995 did not include pension security (according to the government's interpretation).
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GAD had done no risk assessment of the AEAT scheme to justify their advice that “it is unlikely that the benefit promise ... would ever be broken”.
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An AEAT pension was at greater risk than UKAEA pension, because it depended on the success of an unproven company.
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If AEAT or its scheme failed we could be left with greatly reduced pensions (all the more so because there was no PPF at that time).​
Sum Transferred at privatisation
There is strong evidence that the government transferred less than half the proper sum into the new scheme at privatisation. They kept about £200 million.
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GAD determined the sum transferred, but will not reveal its calculations.
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Had the proper sum been transferred in 1996, it's unlikely that the scheme would have been underfunded, and wound up, in 2012.​​​
