Govt share of Mineworkers' Pension Scheme surplus reaches more than £3bn

The government has confirmed that it has received £3.41bn as its share of the surplus from the Mineworkers' Pension Scheme (MPS) since the surplus-sharing arrangement was agreed in 1994.

In response to a written question, Minister for Business, Energy and Industrial Strategy, Kwasi Kwarteng, noted that the guarantee provided by the arrangement had increased scheme members' payments by a third.

He stated: “Since the agreement was reached in 1994, the government has received £3,411.8m as its share of surpluses. This is in return for the provision of the guarantee that ensures pensions are paid.

“The guarantee has enabled an investment strategy that has resulted in scheme members receiving payments 33 per cent higher than they would have been if they received only their actual earned pension up to privatisation.”

The government and the scheme trustees reached an agreement on the future arrangements for pensions from the MPS after the privatisation of British Coal in 1994.

This saw the government guarantee that any pension earned up to privatisation would not fall in cash terms, with any surplus at subsequent valuations to be shared equally (50/50) between the scheme members and the government.

However, the arrangement has been a source of controversy since, with the Coalfield Communities Campaign arguing for a review of the agreement in the 2000s, stating that a “50 per cent share of an unexpectedly large surplus is too much”.

Whilst no changes were made at that time, in April 2019, an open letter to the Chancellor of the Exchequer from the scheme again called for greater protection for scheme members' bonuses and a larger share of the surplus for workers.

Subsequently, in July 2019, MPS trustees wrote to scheme members to confirm that they had received support from the Energy Minster for a proposal for greater protection of existing benefits, which was then agreed to in November.

However, the scheme clarified that whilst a change in the surplus share would be welcome, it would only lead to bonuses for members if investment returns were strong, in turn requiring a riskier investment strategy.

The Labour Party has since committed to reducing to a 10 per cent share of the surplus going to government in its 2019 manifesto, whilst Prime Minister Boris Johnson reportedly made a “categorical” pledge that miners will receive their fair share of the MPS in a campaign visit in Nottinghamshire.

However, the MPS website states: "Since 1994, in reflection of the changing financial circumstances of the scheme, the trustees have asked the government to re-consider the terms of the guarantee, including the surplus sharing arrangements, on a number of occasions.

"The government has made it repeatedly clear in its response to the trustees’ requests that it does not regard the 1994 arrangements as being unfair and that it has no intention of agreeing to changes that are not in its interests."

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