Enterprise Bill

Written evidence submitted by Chris Roots (ENT 18)

Dear Sir

I am writing to put my view forward as to the impact of the £95000 exit payment on Magnox Ltd staff members.

The current life time plan for my employment at  Dungeness A Nuclear Power Station shows that I am expected to be made redundant sometime and no longer than in 35 months’ time , this I have been planning for with my wife and two children since the end of 2006 when the Power Station stopped generating. Many of my prior thirty four years’ service whilst at the Power Station was generating electricity which meant I worked Christmas days, New Year’s Eves, Weekends, Summer holidays, with colleagues and myself attending the site at short notice to provide maintenance on plant and equipment to allow the Nuclear Reactors to remain operational and be shut done in a safe and compliant manner, something that I am sure you and the rest of the south east of England are grateful for. This I undertook when others were enjoying the time off, all in the name of providing safe electricity to the public.

I along with many other colleagues chose to stay with the company to provide significant support and advice in dealing with the Nuclear Waste Legacy, a significant part of this decision was based on the fact that I had been provided protection for my redundancy and pension to enable me to plan my future for myself and family when I was no longer needed at Dungeness. Especially if made redundant in my very late forties and early fifties when it may be harder to find opportunities where I could re train into a new skill.

 I would like to bring to the Minsters attention the following points regarding The Magnox Group ESPS.

The scheme provides predominantly final salary benefits based on an eightieth accrual rate plus a cash lump sum at retirement of 3 times pension.  This is the standard benefit structure of the Scheme.

Also part of the standard benefit structure of the Scheme is a provision that, where retirement is as a consequence of redundancy or reorganisation, the pension shall be paid from age 50 (or date of leaving service if later) on an unreduced basis. It is not an option or a choice for the Trustee or employer, but a member’s right under the rules and has been so since the Scheme’s establishment in 1983, having been a feature of the electricity supply industry’s predecessor Staff Superannuation Scheme since the 1950s. This provision also covers individuals who are under age 50 when made redundant.  Thus a member made redundant 45 is entitled to their pension (unreduced) at age 50 and therefore there seems to be a suggestion of unfairness to younger members ("…someone with long service who has not reached the age required to take an early pension").


For completeness, I should mention that the Magnox Group removed this standard provision for new joiners in 2003, but a significant number of members joined before then and are entitled to the Scheme’s standard redundancy/reorganisation provision.


 Currently, the funding arrangements adopted by the Trustee do not pre-fund this entitlement. Instead, the employer makes a payment to the Scheme on each occasion that a member retires under this rule. This additional payment reflects the additional cost to the Scheme of "early" payment and is required to keep the funding of the Magnox Group of the Scheme in balance.

I am a long serving employee who has already accumulated significant accrued rights. Consequently the payments required when a pension is paid "early" on redundancy will be exceeding £95,000.

It is my understanding that the Bill is written so as to ensure  "that the cap will not have any impact at all on any pension that has been earned through years of service" and I assume these changes will have no effect on individuals’ accrued pension rights.

Therefore I am concerned to understand the practical application of the proposals in relation to the very specific circumstances of my pension Scheme.

In cases where a member leaves as a result of redundancy, for whom the additional payment required exceeds £95,000, presumably the Trustee cannot restrict the benefit proportionately as this would result in a diminution of the accrued rights under the Scheme rules.

If however the full pension is paid (as required by the Scheme rules), but the additional payment was restricted to £95,000 it would immediately weaken the security of benefits for the remaining members and ultimately this shortfall would be revealed in the form of a deficit at the next actuarial valuation which would need to be made good by the employer.

Another point to note is that the Office of National Statistics (ONS) cannot be trusted to identify who is in or out of the public sector. Magnox have drifted in and out of the public sector according to the ONS since being established. We seem to be in when it is convenient – just like now.

I am not against the cap, if it is directed at the so called ‘fat cats’ and their six figure pay-outs. It should not be targeted at long term medium salaried workers such as myself. My current salary is c£50k and it will have a very significant impact on me when I am made redundant within the next three years (not through my redundancy payment but through my pension strain payment).

I am more than happy to share my exit payment costs with yourselves if you wish.

February 2016


Prepared 11th February 2016