Members of the Mineworkers’ Pension Scheme will receive a bonus payment of almost a third of their regular pension income after the government confirmed it will transfer a reserve fund’s assets to the trustees.
In yesterday’s Budget statement, chancellor Rachel Reeves said the government would transfer the scheme’s Investment Reserve Fund to the trustees to be distributed to members.
The Mineworkers’ Pension Scheme said this would translate into a bonus payment equivalent to 32% of a member’s guaranteed pension.
The scheme’s latest annual report showed the Investment Reserve Fund to have £1.4bn in assets as of 30 September 2023.
“Today we are keeping our promise so that working people who powered our country receive the fair pension that they are owed.” - Rachel Reeves, chancellor
In a statement, the scheme trustees said: “The trustees are grateful to the many members and MPs who have shown support of the scheme on this matter over the years.”
The National Union of Mineworkers welcomed the announcement and the bonus payment, adding: “We now need to work with the government to review the current unfair surplus sharing arrangement.”
In the Budget document accompanying the chancellor’s speech, the government said it would also “take forward a review of the existing surplus sharing arrangements”.
“Today we are keeping our promise so that working people who powered our country receive the fair pension that they are owed,” Reeves said in parliament. Labour had stated it would review the surplus sharing arrangement in its election manifesto.
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.
Steven Hull, partner at UK law firm Burges Salmon, said: “The Mineworkers’ Pension Scheme might be considered an interesting case study on how a surplus can be effectively generated by running on a pension scheme that has a strong employer covenant standing behind it.
“The scheme’s trustees acknowledge that the government guarantee the scheme benefits from has enabled them to pursue a ‘more ambitious’ investment strategy than they would otherwise have been able to.
“Today’s changes relate to how the surplus will be shared going forwards and are clearly specific to the circumstances and history of this particular scheme.
“We did wonder if the chancellor might look more broadly at surpluses in pension arrangements – with many defined benefit schemes now in surplus, relaxing the rules to allow return of surplus to employers more easily might have generated some healthy tax receipts. But it looks like that is a question for another day.”
