Govt urged to review Mineworkers’ Pension Scheme arrangement

The government has been urged to review the surplus sharing arrangements in the Mineworkers’ Pension Scheme to ensure that they are fair, following a review of the scheme by the Business, Energy and Industrial Strategy (BEIS) Committee.

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 an effort to provide an “immediate cash uplift”.

The report revealed that for the average pensioner receiving £84 a week, this would equate to a weekly uplift of £14.

The recommendations were made following an inquiry into the government's "controversial" 50:50 surplus sharing agreement with the scheme, which was agreed in 1994 in return for a government guarantee that the value of the pensions would not decrease.

The inquiry report, however, found that given the strong performance of the Mineworkers’ Pension Scheme and the "vast sums" which have been paid to the government, it is “unconscionable” that many of the scheme beneficiaries are struggling to make ends meet.

Indeed, the report revealed that, to date, the government has received £4.4bn in cash payments from the scheme, comprising £3.1bn in its share of surpluses and £1.3bn from the investment reserve, and is due to receive “at least” a further £, totalling £6.3bn.

The government also recently revised its answer to a parliamentary question as to how much it has received as its share of surpluses from the scheme from the £3.1bn to £3.41bn.

Furthermore, the inquiry emphasised that the government has not paid anything into the scheme, having heard evidence that it is “extremely unlikely” that it ever will.

Considering this, it argued that “allowing the arrangement to continue would appear antithetical to the government's stated aim of redressing socio-economic inequality and 'levelling up' left-behind communities”.

Commenting on the report, BEIS Committee chair, Darren Jones, said: “The government has benefited from billions of pounds of surpluses since 1994 without having to contribute a pound of taxpayers’ money to miners’ pensions.

“Mining communities have suffered from pit closures for generations, with many pensioners now living on low incomes.

“Whilst the government’s guarantee to the pension fund has provided vital security to Mineworkers’ Pension Scheme members, it’s clear that the government has profited to a far greater extent than originally envisaged. That now needs to change.

“The government should now act quickly on our recommendations by agreeing to hand back more of future surpluses to pensioners and delivering an immediate uplift through the return of the £1.2bn investment reserve.”

Commenting in response, a government 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 and are carefully reviewing the findings of this report, and will consider all recommendations made.”

    Share Story:

Recent Stories

Making it easier for smaller schemes to access bulk annuity pricing
Pensions Age editor, Laura Blows, speaks to Just DB business development manager, Pete Jennings, about how smaller schemes can access the bulk annuity market
Green investing
Laura Blows speaks to FTSE Russell, Head of Sustainable Investment Solutions, Lee Clements, about green investing, green revenue data and the EU Taxonomy