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UK government urged to revisit miners’ pension scheme surplus rules

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A surplus-sharing arrangement for a UK pension scheme for former mineworkers must be renegotiated, according to politicians.

During a debate in parliament last week, politicians called for a review of the arrangements for the £12bn (€13.5bn) Mineworkers’ Pension Scheme (MPS). The government has been entitled to take a 50% share of any surplus since the scheme was closed in 1994, in exchange for providing a funding guarantee.

Since then, the government has taken at least £4.4bn from the scheme’s excess funds, according to official figures. However, members of the scheme have been campaigning for years to revise the scheme rules and improve the benefits granted to members – some of whom receive less than £80 a week, MPs heard last week.

Grahame Morris, MP for Easington, a former mining community in north-east England, said the MPS trustees were keen to renegotiate the surplus-sharing arrangement, while acknowledging that the arrangement was necessary to allow trustees to take more investment risk.

“Surely the money that miners paid was deferred wages,” Morris said. “It was for their benefit in their retirement, which they never got a chance to enjoy, or for their widows and other miners – not to be used as regeneration funds.

“The importance of coal may have declined, but our gratitude to the miners should never wane and we owe them a debt of honour. Miners and their widows deserve better than poverty pensions. I am asking… to end the pension theft and allow miners and their widows a better quality of life in retirement in their remaining years.”

Ed Miliband

Ed Miliband: “The more closely we look at this decision, the more dubious it becomes”

During the debate, Ed Miliband, former leader of the Labour Party, led criticism of the 1994 decision to split the scheme’s surplus. He cited a written answer to a question tabled by fellow Labour MP Stephanie Peacock last year, which revealed that no official actuarial advice was sought before the arrangements were confirmed.

“If there was no actuarial advice behind a decision that had billions of pounds worth of implications for hundreds of thousands of miners and their families, that really was negligence of the highest order,” Miliband said. “The more closely we look at this decision, the more dubious it becomes.”

BEIS to meet with trustees

In response to the debate, Andrew Stephenson, parliamentary under-secretary for the Department of Business, Energy and Industrial Strategy (BEIS), said he would meet with the MPS trustees later this month and pledged his “full support” for their efforts. He said he had shared an analysis of proposals for MPS changes with the UK’s treasury department.

However, he stopped short of promising a government review and admitted the proposals did not include a change to the surplus-sharing arrangement.

Andrew Stephenson

Andrew Stephenson responds to questions during the debate on the Mineworkers’ Pension Scheme

“Central to the trustees’ proposals is protecting existing bonuses,” he said. “Under that option, if there is a deficit in the future, members will still see their guaranteed pensions continue to rise in line with RPI [inflation], and their current bonuses will not be eroded. Without that additional guarantee, members may not be able to get any increase in payment, possibly for many years.”

However, he said the proposals could mean a “significant additional liability” for the government.

Although the motion received cross-party support, the vote was not binding, meaning that the government was under no obligation to follow through with a review.

Speaker of the House John Bercow told MPs: “I rather fancy that this matter will be returned to again and again and again if members feel that the settled will of [politicians] has not been honoured in practice. I will also add that a situation in which the settled will of [politicians] is not then honoured in practice is bad for parliament.”

Lawmakers, led by Labour party politicians representing former mining communities, have held two debates on the surplus-sharing arrangement this year, urging the government to take prompt action as the schemes’ membership was falling. Labour and Wales’ Plaid Cymru party both pledged to address the issue in their manifestos for the 2017 general election.

A petition signed by more than 100,000 people in support of a review of MPS was delivered to prime minister Theresa May’s official residence in London earlier this year.

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