Manifesto pledge could end Mineworkers’ surplus sharing
The Labour Party has promised to end the surplus sharing arrangement with the Mineworkers’ Pension Scheme that has led to more than £4bn being taken out of the scheme.
In its election manifesto, published today (13 June), Sir Kier Starmer’s party said it would “end the injustice” related to the £10.6bn Mineworkers’ Pension Scheme.
This refers to a surplus sharing agreement, in place since British Coal was privatised in 1994. Under the agreement, the government is entitled to receive 50% of any surplus in the scheme following a triennial valuation in exchange for a guarantee that the government will make good any deficit.
Labour said: “We will review the unfair surplus arrangements and transfer the Investment Reserve Fund back to members, so that the mineworkers who powered our country receive a fairer pension.”
The National Union of Mineworkers (NUM) welcomed the news on its website, stating: “This is as a result of a lot of hard work and lobbying by the NUM, supportive Labour MPs, Facebook groups and individuals who have raised these issues with their local MP.
“Should the Labour Party be elected to form the next government, the NUM will be meeting with ministers to ensure these manifesto commitments are acted on as soon as possible. We have waited too long.”
The surplus sharing story
According to a Business, Energy and Industrial Strategy (BEIS) Committee review from 2021, the government had received £4.4bn in payments since 1994, but not paid anything in.
An additional £1.9bn was due to be paid to the government based on the 2021 triennial valuation.
In its 2021 report, the BEIS committee said the 50-50 split was “arbitrary” and that the government “was negligent not to take actuarial advice” when setting the terms of the agreement.
The report stated: “Governments should not be in the business of profiting from mineworkers’ pensions...
“The government must acknowledge that continuation of the arrangements in their current form deserves a review and a better outcome for pensions should be found.”
The committee’s report called for the £1.2bn Investment Reserve Fund to be redistributed to scheme members. It also proposed a revised agreement that would allow the government to take a 50% share of future surpluses only to match the value of previous payments into the scheme to address deficits.
“Such an arrangement takes account of the vast funds the government has received thus far and the significant reduction in the risk it faces, and would ensure that neither party will be out of pocket in future,” the BEIS report said.
However, the government at the time refused to revisit the agreement, arguing that scheme members had also benefited from strong investment performance.
Further reading
Govt rejects calls for £1.2bn pension boost for mineworkers (5 July 2021)
MPs demand Sunak addresses mineworkers’ scheme issues (5 May 2021)