Defined Benefit  

Govt to 'explore options' on mineworker pension concerns

Govt to 'explore options' on mineworker pension concerns

The government has promised to work with the trustees of the Mineworkers Pension Scheme (MPS) to address concerns that it has been "stealing" these peoples’ pensions.

Energy minister Claire Perry said she has met with the trustees and has agreed to "explore options" for the scheme's future to address concerns.

According to scheme rules, any surplus will be split between members, in the form of bonuses, and the government, which guarantees the scheme.

The 2017 valuation of the pension fund showed the final salary plan has a surplus of more than £1.2bn, which means the government will receive £600m over the next decade.

Earlier this month, Dennis Skinner, the Labour MP for Bolsover, called on the Conservatives to "stop stealing the miners' pension", since the government has received more than £3.5bn from the scheme over the years.

Ms Perry revealed, in a written answer to Parliament this week (25 July), that she met MPS trustees recently to discuss options for the future of the scheme.

She said: "As a result of that discussion, I have asked [Department for Business, Energy and Industrial Strategy] officials to work with the trustees to explore options for revising the scheme to the benefit of all parties.

"The MPS has worked well for all parties and credit must go to the trustees for their excellent investment strategy and administration of the scheme."

She added: "As trustees have acknowledged, the government guarantee has enabled an investment strategy that has resulted in scheme members receiving payments 33 per cent higher than they would have been had they received only their actual earned pension up to privatisation."

The most recent valuation revealed scheme members will receive an additional 4.2 per cent of the guaranteed pension as bonuses for each of the next six years.

MPS trustees said these will be "provided with certainty over the next six years and cannot be lost in that time, even if financial markets perform disappointingly". 

Bonuses, and therefore increases to total pensions, from 2024 and beyond will depend on the outcome of the 2023 and subsequent actuarial valuations, it added.

When British Coal was privatised in 1994, it was agreed the government would act as guarantor for the MPS and the British Coal Staff Superannuation Scheme (BCSSS).

As part of the deal, any surplus would be split equally between HM Treasury and the schemes' members.

In 1996 it was estimated the funds would generate a £2bn surplus over the next 25 years but the schemes have performed considerably better than expected and the Treasury received £10bn.

The MPS has around 200,000 members while the BCSSS has around 57,000 members.