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A parliamentary committee has called on the UK Government to review the Mineworkers’ Pension Scheme – and give ex-mineworkers their share of a £1.2bn reserve.
A report, published by the Business, Energy and Industrial Strategy (BEIS) Committee on Thursday, said it was “unconscionable” that there are people on the scheme who are struggling to make ends meet.
History of the Mineworkers’ Pension Scheme
The scheme was first introduced in 1952.
Prior to April 1975, mineworkers made contributions to the scheme on a flat-rate basis, paying no more than 20p in each week.
However, after 1975, the contributions paid and the benefits received from the scheme became linked to the workers’ salaries. Where workers’ contributions weren’t enough to cover the benefits, British Coal stepped in to pay the rest.
British Coal was privatised in 1994, and the pension scheme closed for further contributions. The UK Government then became the guarantor for the scheme in place of British Coal.
The scheme had a surplus that year, half of which went towards topping up members’ pensions, while the other half was left as an investment reserve.
It is this investment reserve, worth £1.2bn, that the BEIS Committee wants distributed among ex-mineworkers within the scheme.
The committee has said the government should review the surplus sharing arrangements in the scheme. This arrangement sees the government get half of any surplus from the scheme.
The report says: “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.”
The arrangement was agreed in 1994 after the privatisation of British Coal, in return for a Government guarantee that the value of the pensions would never be decreased.
Darren Jones, chair of the BEIS Committee, 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.”
Mr Jones added: “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.”
By splitting the £1.2bn between ex-miners, it would mean the average pensioner on £84 a week would receive an extra £14 a week.
The report reveals that to date, the Government has received £4.4bn in cash payments from the scheme and is set to receive a further £1.9bn – bringing the total amount received to £6.3bn. The committee heard the government has never paid anything into the scheme and it is unlikely it ever will.
The report has recommended the government should only be entitled to a share of surpluses if it has put money into the scheme.
A UK Government spokesperson said: “Mineworkers’ Pension Scheme members are receiving payments 33% 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, are carefully reviewing the findings of this report, and will consider all recommendations made.”
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