Confusion over DWP's factsheet on insolvent occupational pension scheme

What happened

AEA Technology plc was formed in 1996 from the commercial arm of the publicly owned UK Atomic Energy Authority. Some staff who had transferred to the newly privatised company also decided to move their existing, public service, pensions into the new private company pension scheme.

In autumn 2012 DWP began to receive enquiries from concerned members of the company's private pension scheme. They told DWP that the pension scheme was insolvent; it could not afford its liabilities and was entering an assessment period with the Pension Protection Fund (PPF), which could compensate them for some, but not all, of their pension benefits from the failed scheme. Members felt they would have been better off if they had left their old public service pensions where they were.

Members who contacted DWP said their pensions had been protected by the Atomic Energy Authority Act 1995 when their employment transferred from the public sector to the private sector. They also raised concerns about a note issued by the Government Actuary's Department (GAD) in 1996, which had explained the different options available to staff in connection with their pensions.

In 2013 DWP produced a factsheet to answer members' enquiries. DWP involved GAD and the PPF with this, and also the Department for Business, Innovation and Skills (BIS) as it was now responsible for issues relating to the privatisation. DWP included information from all of these organisations as answers to the common questions the enquiries raised.

Several members complained to DWP that answers it gave in the factsheet were inaccurate and misleading. Members were particularly concerned about what it said about the Atomic Energy Authority Act 1995 and the advice GAD gave about this. The members said the factsheet had confused matters, and they said organisations like GAD and BIS were using the factsheet to defend themselves against complaints.

We agreed to investigate DWP's actions, but we could not look at members' complaints about GAD, the PPF or BIS. The law limits our ability to investigate specific types of complaint about GAD, the PPF and BIS, and the members' complaints did not fall within this.

What we found

We partly upheld the complaints about DWP. DWP was not responsible for the information AEA Technology plc gave to employees when it was privatised. Complaints about that should have been directed to BIS. DWP was also not responsible for the advice that GAD gave, and complaints about that should have been directed to GAD.

DWP knew this when it created its factsheet, but the factsheet did not make this clear. The factsheet also did not say what individuals could do if they were unhappy with the information in it. DWP's failure to include this information on the factsheet caused confusion and inconvenience.

Putting it right

Following our investigation DWP's factsheet accurately showed what information had been provided separately by DWP, GAD, BIS and the PPF. We could see the complainants disagreed with information GAD, BIS and the PPF gave, but that was a matter for them to take up with those organisations.

DWP apologised for the confusion and inconvenience caused by its failure to properly explain its role in the factsheet.