On privatisation of the nationalised UK coal mining industry in 1994, the Mineworkers’ Pension Scheme (“MPS”) was closed to further contributions and privatised. The UK Government became guarantor to the Scheme, and guaranteed that pension members would always receive the benefits they had earned up to privatisation, and that these benefits would increase in line with inflation. In return, it was agreed that the Government would be entitled to a 50% share of any surpluses in the Scheme’s value at future valuations. The other 50% would be distributed to members through bonuses.
The NUM was not involved in establishing the terms of the original agreement.
Since 1996 the UK Government has accrued £4.4 billion in payments from the MPS under the terms of the Guarantee that is in place, while members of the National Union of Mineworkers have received Bonus Augmentations of around 30 per cent of their guaranteed benefit.
The NUM has been campaigning since 1999 for a review of the MPS Scheme, and that former mineworkers should be entitled to a greater return from the surplus funds imposed back in 1994.
The NUM has commissioned two complementary independent reports, The MPS Guarantee, UPS Memorandum, 1 Feb 2018; and A Fair Division of Surplus in the Mineworkers’ Pension Scheme, First Actuarial, Jan 2018.
The NUM provided evidence that, in both cases, conclude the unfairness of the current distribution of surplus funds.
It is estimated that the median gain to be made by the UK Government from the miners pension fund amounts to £23 billion in real terms over the next 60 years and, due to the potential for the Government to achieve very large gains, the gains made are skewed upwards to £55 billion.
The National Union of Mineworkers continues its campaign to ensure that the distribution of surplus funds must be reviewed on the grounds of ethics and fairness.
Chris Kitchener, General Secretary of the NUM, continues: “Within our first report it states: ‘We now know a lot more about the finances of the MPS and the risks that it faces than was known in 1994, when the agreement was made. However, given the size of the sums involved, it is not surprising that successive Governments have sought to avoid any such review’.
“While this may be the case, for the sake of our members and their families, we will continue to fight for a fair deal. It is only right.”
It is a tragic irony that a government which destroyed an industry, union and community should now continue to take billions from the Miners pension funds, rather than pay retired miners better pensions.
The NUM will continue to lobby the Government and campaign for a more balanced approach to the distribution of surplus funds, with the recommendation that its entitlement to the Investment Reserve of £1.2bn is also redirected to pension members.
Mineworkers' Pension Scheme: Rejection a 'slap in the face' - BBC News - 5th June 2021
Blog by Bruce Shields, Partner