01 November 2024
We’ve recently learnt that the Government has agreed to make a big change to the Mineworkers’ Pension Scheme (MPS). The scheme’s £1.5 billion investment reserve has been transferred to members and will be used to pay them a bonus pension. This new bonus is worth 32% of MPS members’ guaranteed pensions.
We’re very pleased to learn of such a big increase to the incomes of so many former employees of British Coal. However, we know that members of BCSSS will have questions about whether they can expect a similar increase. In this update, we explain how this change to MPS has come about, and what we’re doing to engage with the Government.
Why the investment reserves were created
When British Coal was privatised in 1994, the Government took on the role of guarantor for BCSSS and MPS. This meant that if either scheme ran short of money, the government would have to make sure there was enough to pay members’ pensions.
At that time both schemes had a surplus. Half of each surplus was used straight away to improve pensions for members. The Government used the other halves to create investment reserves for each scheme. The money in these reserves was to be used as a ‘buffer’ to make up for any future shortfall. If they weren’t needed, the reserves were to be gradually reduced, with the money in them paid to the Government.
Campaigners asked for a review of the MPS investment reserves
Over the years, different groups and individuals campaigned for changes to MPS, to include a review of the investment reserve. Trade unions, MPs and scheme members were all involved.
This campaign led to a select committee review of MPS in 2021. The select committee recommended that the investment reserve should be transferred to members without MPS having to give up the Government Guarantee. However, the government at the time decided not to act on the committee’s recommendations.
The Labour party promised it would make changes to MPS
This changed in 2024. During its election campaign, the Labour Party promised that if it won the election it would make changes to MPS. The manifesto did not mention BCSSS.
The Labour Government has now made good on its promise and transferred the MPS investment reserve to members of the scheme.
How the BCSSS Trustees have responded
BCSSS and MPS are separate schemes. Each has its own investments, scheme rules and trustee board. However, given the similarities between the two schemes, we believe it’s fair to ask for a similar change to BCSSS.
Before the MPS announcement, we had already indicated to the Government that we believe the current actuarial valuation is an opportunity to review the structure of BCSSS. We’ve said we’d like to identify any areas of unfairness similar to those in MPS and find ways to deliver better outcomes for members.
Now that the further details of the changes to MPS are known, we have sent a letter to the Government. We’ve stressed the similarities between the schemes and their memberships. And we’ve asked for a meeting with the relevant minister to discuss possible changes to BCSSS to improve members’ pensions.
What happens next
We’re doing everything we can to engage with the Government and improve pensions for members of BCSSS. However this is a difficult process, and could take some time, especially as Government has indicated there will be further review work on MPS over the coming months. As soon as anything changes, we’ll post an update on the scheme website and email members to let them know.
This is a political matter – changes to the Scheme rules can only be made by the Government. Members may wish to contact their MP, highlight the changes to MPS, and ask if they’re able to do anything on behalf of BCSSS members.
We know how important this subject is to members. We will share any updates as soon as we can.