Govt rejects MPs' Mineworkers' Pension Scheme recommendations

The government has rejected the Business, Energy and Industrial Strategy (BEIS) Committee's recommended changes for the Mineworkers’ Pension Scheme, in what has been described by the committee chair as a “slap in the face” for scheme members.

The committee previously urged the government to review the 50:50 surplus sharing arrangement with the scheme, which was agreed in 1994 in return for a government guarantee that the value of the pensions would not decrease, to ensure it was fair.

In particular, the committee suggested that the government should relinquish its entitlement to the investment reserve and transfer the approximately £1.2bn fund to miners, in turn providing a weekly uplift of £14 for the average member, currently receiving £84 a week.

In its response to the report, the government stated that the inquiry had allowed issues surrounding the scheme to be “aired and considered thoroughly”, with BEIS Department Minster, Anne-Marie Trevelyan stating that she was "pleased" that all parties recognise the reassurance that the guarantee has provided.

However, the government also confirmed that it has rejected the committee's recommendations, stating that it believes the 1994 arrangement "was fair and beneficial to both scheme members and taxpayers".

In a letter to the committee, Trevelyan confirmed that she had met with scheme trustees on 21 June to discuss the report, asking them whether they might feel able to proceed without the continued government guarantee, which would enable all surpluses to be shared amongst scheme members.

“However, there are numerous examples of pension schemes that have been unable to meet their basic obligations, let alone increase pensions to the extent the Mineworkers’ Pension Scheme has under the current arrangements," she stated.

“The government continues to believe that the arrangement agreed in 1994 was fair and beneficial to both scheme members and taxpayers. Scheme members have rightly shared in the benefits but the government has taken on all the risk.

"In the meantime, I am unable to agree to the committee’s recommendations.”

In particular, the government response refuted the assertion that trustees had no choice about the proposal in 1994, stating that if trustees feel that 50 per cent of surpluses is too high a price to pay for the guarantee and want to extract themselves from the arrangement, BEIS ministers would be “happy to have that discussion”.

The government also stated that it does not accept that it has benefitted unduly from the arrangements which have been a success and benefitted all parties, arguing that these concerns have only arisen as a result of the scheme's success.

"Had the investments not provided as good returns over the years, we would not be having this debate, but scheme members’ pensions would be considerably lower," it stated.

In addition to this, the government stated that the trustees have been “clear” that they would prefer to retain the guarantee rather than take 100 per cent of future surpluses, pointing out that changes suggested by the trustee in 2019 had also prioritised the protection of bonuses accrued over changing the surplus sharing arrangement.

“As BEIS Ministers stated to the trustees on 21st June 2021, the government is always open to suggestions of ways to improve the schemes, as the recent changes show," the response continued.

"The government is happy to consider ways to improve benefits, though this has to be weighed against the risks to taxpayers.”

However, BEIS Committee chair, Darren Jones, argued that members of the scheme will be "deeply disappointed at the intransigent message of the government’s response" to the report.

"It represents a slap in the face for pension scheme members that the government is continuing its ‘take it or leave it’ approach on arrangements around the government guarantee," he argued.

Jones also warned that whilst the government "says it is willing to listen" it has rejected "any meaningful negotiation on the guarantee or any review of the terms of the 50:50 split".

He continued: "The government has benefited from billions of pounds of surpluses since 1994 without having to contribute a pound of taxpayers’ money to miners’ pensions.

"The tone of the government’s response suggests they do not understand the reality of the historic injustice felt by thousands of retired miners. Ministers should think again and help ensure these pensioners get a fair deal.

“I will be meeting with the pension scheme trustees in due course to discuss the government’s response and my committee will then agree how best to take this matter further.”

Commenting in response to the concerns, a BEIS spokesperson said: “Mineworkers’ Pension Scheme members are receiving payments 33 per cent higher than they would have been thanks to the government’s guarantee.

"On most occasions, the scheme has been in surplus, and scheme members have received bonuses in addition to their guaranteed pension.

“We remain resolutely committed to protecting the pensions of mineworkers, but do not accept that the committee’s recommendations strike a fair balance between scheme members and taxpayers.”

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