Govt looking to ‘explore options’ on Mineworkers' Pension Scheme

Written by Theo Andrew
06/08/18

The government has held talks with the trustees of the Mineworkers' Pension Scheme (MPS) to explore how it can revise the scheme benefits “for all parties”, it has revealed.

Responding to a written parliamentary question on 25 July, Member of Parliament for Devizes, Claire Perry, said that the Department for Business, Energy and Industrial Strategy has spoken with trustees of the scheme to consider its options.

In December 2017, former Pensions Minister Richard Harrington restated that the government’s position on the surplus sharing arrangement of MPS has not changed, calling the current surplus sharing arrangement, which sees the government pocket 50 per cent of any scheme surpluses, “fair”.

However, in what could offer a glimmer of hope to members, Perry wrote: “I met the MPS trustees recently to discuss options for the future of the scheme. As a result of that discussion, I have asked BEIS officials to work with the trustees to explore options for revising the scheme to the benefit of all parties.”

After the 2017 valuation of the scheme, trustees and the government agreed that members will receive a bonus of 4.2 per cent of guaranteed pensions over the next six years.

The scheme said any further increases or bonuses to pension payments will depend on the outcome of the 2023 actuarial valuations, meaning the planned 2020 valuations will have no baring on the amount members will receive.

Mineworkers Union general secretary Chris Kitchen said it is unclear if these new talks will have any baring on the scheme over the next six years.

Perry added that the government guarantee has enabled an investment strategy allowing for 33 per cent higher returns than they would have received if their scheme was privatised.

Despit this, Kitchen said that what was fair for the government isn't necessarily fair for scheme beneficiaries and that it should be taking closer to 10 per cent of the schemes' surpluses.

He added: "Given that it’s been 23 years and we have never called on that guarantee it hasn’t actually cast the government a penny.

"The level of risk that the government has taken on appears to be minimal, and therefore their reward should reflect. They shouldn’t be taking 50 per cent they should be taking 10 per cent to reflect that additional risk."

In September 2017, it emerged that the government received almost £6.5bn from two pension schemes in the mining industry since 1994 when the surplus sharing arrangement was agreed.

Under the arrangement, 50 per cent of any surplus after 1994 is made available to provide bonuses for scheme members, with the remaining 50 per cent going to the government.

However, campaigners believe that the 50:50 split is unfair and the government has “robbed” members of pension benefits, as bonuses are paid out with the surplus.

Related Articles

Cautious optimism in a challenging world
Matthew J. Bullock, Investment Director, Global Multi-Asset Strategies, Wellington Management, meets Francesca Fabrizi to discuss how multi-asset strategies can help investors

Latest News Headlines
Most read stories...
World Markets (15 minute+ time delay)