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Government take £419m from miners' pension schemes

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  • Government take £419m from miners' pension schemes

UK - The Department for Business, Enterprise and regulatory Reform (BERR) has confirmed it withdrew more than £400m (€500m) from two closed miners' pension funds in 2007.

Figures from the BERR annual report showed the investment reserves in the two closed pension schemes belonging to British Coal, the British Coal Staff Superannuation Scheme (BCSSS) and the Mineworkers' Pension Scheme (MPS) together totalled around £3.1bn.

The investment reserves consist of the unallocated share of the valuation surplus in the two schemes at the time of British Coal's privatisation in 1994, and they are used to make up any deficits in the schemes following triennial valuations.

However, if the reserves are not needed for this purpose, they are "ultimately payable to the government" over a 25-year period to 2019, under the advice of the Government Actuary, under the terms of the deal signed at the break up of British Coal.

The annual report showed in 2002 and 2003 the valuations of the two schemes revealed deficits which were funded by the reserves, however since surpluses were identified in the most recent scheme valuations in 2005 and 2006, the government has exercised its right to withdraw 50% of any valuation surplus.

The government withdrew £133m from the combined pension reservesin 2007/08 as a result, however as the latest valuations revealed a surplus in both schemes, the government also withdrew £286m as its annual share of the valuation surplus.

The annual report showed the total left in the "guarantor's fund" - half of the two pension scheme's surplus but which is paid out over a 10-year period - remains at just over £1bn, despite a revaluation reducing the pot by £15m.

The report confirmed the Government Actuary "completed actuarial valuations of both schemes during 2006-07, which resulted in an addition to the Current Asset Investment [Guarantor's Fund] related to each Scheme and an increase in the annual payments to the department previously expected".

That said, confirmation of the withdrawals from the schemes comes as the Liberal Democrats claimed to have uncovered figures showing taxpayers fund pension pots for top civil servants worth a total of £150m.

The opposition political party claimed the average pension pot among the top 10 civil servants from 19 government departments is over £800,000 which could provide a retirement income of more than £60,000 a year, compared to the average UK pension pot of £25,000, which provides an income of £1,100.

Jenny Willott, shadow work and pensions secretary for the Liberal Democrats, said: "These costs are clearly exorbitant compared to what the public can expect their own employers to put in. The government cannot afford to stick its head in the sand any longer over public sector pensions.

"We need an independent commission to look at the options for reform of pensions for the next generation of public sector employees. They must be fair and affordable both for civil servants and taxpayers," she added.

Private corporate pension funds - ie those which have at no time been owned by the state - are not permitted to withdraw surplus assets under existing regulatory rules.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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