Energy Security Bill factsheet: Nuclear decommissioning authority pensions reform
Updated 1 September 2023
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Why are we legislating?
These measures will bring Nuclear Decommissioning Authority (NDA) pensions into line with wider public sector pensions in moving from a final salary scheme to a career average scheme. The new scheme was agreed with unions, and includes provision for retirement on full pension before state pension age. NDA will work with their workers, unions and pensions trustees to implement the changes.
This measure will ensure better equity across the Public Sector. It will also deliver savings to the NDA budget which will be recycled to support the NDA mission of decommissioning the UKs Nuclear Legacy.
How the Bill will achieve this
The Bill and subsequent secondary legislation will provide the NDA with the ability to work with the trustees of relevant pension schemes in order to reform those schemes. The primary and secondary legislation will also provide for various pieces of legislation to be amended or disapplied so that the NDA is able to implement the necessary reforms.
Frequently asked questions
Is this still a good pension?
Yes. This is still a very good pension. It allows full pension awards at 60 for the majority of members, whereas most public sector pensions are linked to state retirement age.
Will the pension members have built up be impacted?
No. The pension members have built up before the CARE scheme is introduced will not change and will continue to be calculated using actual final pensionable pay. These changes will only affect future pension accrual.
Why such a delay between union agreement and implementation of legislation?
A lack of Parliamentary time has meant this is the first opportunity to make the change.
How much are contributions are going up by?
Once the CARE scheme is introduced contributions will increase by 3.05% phased over 3 years.
Background
Government policy, led by HM Treasury, is to reform public sector pension schemes by implementing the recommendations from Lord Hutton’s review conducted in 2011. This resulted in the Public Service Pensions Act 2013, which reformed the majority of pension schemes within the public service. Over four million public sector workers have already moved to new pension arrangements and government policy is for final salary pension schemes in the public sector to be reformed to a Career Average Revalued Earnings (CARE) based scheme, in line with the Public Service Pensions Act 2013.
There are two final salary public sector schemes (with a total of approximately 8,000 scheme members) within the Nuclear Decommissioning Authority’s (NDA) group that are therefore within scope for reform, with estimated savings currently expected to total in the region of £200 million subject to the date of implementation.
Recognising the vital work that the NDA and its workforce delivers, the Department for Business, Energy and Industrial Strategy and the NDA worked with national trade unions in 2017 to develop an agreed pension scheme that was tailored to the characteristics of the affected NDA employees. This resulted in a proposed bespoke CARE scheme which is in line with the key principles of reforms already implemented in respect of other public sector pension schemes. The bespoke CARE scheme design was formally accepted by the national trade unions following statutory consultation with affected NDA employees and a ballot of union members.
Following this a public consultation was undertaken which resulted in this policy being confirmed.
Further information
The following documents are relevant to the measures and can be read at the stated locations: