Nuclear Decommissioning Authority (Pension Scheme Amendment) Regulations 2024

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Nuclear Decommissioning Authority (Pension Scheme Amendment) Regulations 2024.

My Lords, these regulations were laid before the House on 19 December last year.

The 2011 report by the noble Lord, Lord Hutton of Furness, started the Government on the road to the reform of public sector pensions. Although the Public Service Pensions Act 2013 made a large number of reforms, it did not cover all public bodies, including those within the Nuclear Decommissioning Authority group.

The Nuclear Decommissioning Authority, or NDA, is the statutory body responsible for the decommissioning and safe handling of the UK’s nuclear legacy. It has 17 sites across the United Kingdom, including Sellafield. The NDA was created in 2005 via the Energy Act 2004. However, many of its sites have been operating since the middle of the 20th century. This lengthy history has therefore led to a complicated set of pension arrangements. This includes two pension schemes that, although closed to new entrants since 2008, provide for final salary pensions and are in scope of the reforms. These are the combined nuclear pension plan and the site licence company section of the Magnox Electric Group of the electricity supply pension scheme.

In 2017, the then Department for Business, Energy and Industrial Strategy and the NDA engaged with the trade unions to agree a reformed pension scheme tailored to the characteristics of the affected NDA employees. This resulted in a proposed bespoke career average revalued earnings—also known as CARE—scheme, which, following statutory consultation with affected NDA employees and a ballot of union members, was formally accepted by the trade unions. The bespoke scheme is in line with the move to CARE made by the rest of the public sector.

Subsequently, a formal government consultation was launched in May 2018 and the Government published a response in December 2018 confirming the proposed changes. The reformed scheme still offers excellent benefits to its members. Notably—indeed, unusually for other reformed schemes—it still includes provision for members to retire at their current retirement age. For nearly all of them, this will be 60.

A statutory framework which applied to pension benefits across the NDA estate meant that specific legislation was needed to implement the new reformed scheme. The Energy Act 2023 provided the Secretary of State with the powers to make secondary legislation designating a person who will be required to amend the provisions of a nuclear pension scheme. This secondary legislation is being made to require the NDA and Magnox Ltd to amend relevant NDA pension schemes and implement CARE-based pension reform in accordance with the broader public sector pay policy. The instrument will also modify the statutory pension protections contained in the Energy Act 2004 and the Electricity (Protected Persons) (England and Wales) Pension Regulations 1990 in support of the reforms.

My Lords, I am grateful to my noble friend for that explanation, particularly as he does not seem in the best of health. I do not want to add to his distress, but I want to raise three issues.

The first concerns paragraph 7.3 of the Explanatory Memorandum, from which it appears that, notwithstanding the Government’s decision to implement the recommendations of the 2011 Hutton review, some employees in the public sector will remain outwith it. It says that a certain number of protected persons were

“not included in the … public consultation as there were so few of them”.

If there were so few, one would have thought the consultation would be much easier than if there were a relatively large number. However, I wonder what justification there is for leaving these public employees outwith the Hutton review. It says at the end:

“Should Government wish to change this position it will undertake a full consultation and further regulations”.

However, given that everybody else in the sector has moved over to the new regime, what is the reason for leaving these relatively few people outwith it?

Secondly, paragraph 10.5 says:

“We have shared our intentions with devolved administrations”.

I assume that this does not need a legislative consent Motion and that it is a reserved power, but it would be interesting to know what the devolved Administrations said in response to the sharing of intentions.

My last point is one of timing. The Government took the decision to bring forward this SI in December 2018, as we see in paragraph 10.4. It says:

“The delay in securing the changes related to the difficulty in securing sufficient Parliamentary time rather than any intention to review the underlying policy”.

I do not want to make any overoptimistic proposals but I would be surprised if this took more than 20 minutes. It has not been through the other place, so we do not know how long it will take there, but I suggest that it will take less time than the upper House. So it was not policy or drafting but a difficulty in securing sufficient parliamentary time. Is that really why we have had to wait over five years before considering this SI?

However, I found my noble friend’s proposals entirely convincing and I think this is a very sensible SI.