The Mineworkers’ Pension Scheme is working with the government on a new surplus sharing arrangement, “so that members’ pensions can be improved as soon as possible”, it said. The news follows a commitment by the Labour party to end the arrangement.  

In its election manifesto, Labour had committed to “end the injustice” of the scheme for 119,000 former miners and their dependants, saying: “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 trustees of the £10.6bn MPS have now said they are working with the government on this commitment.  

Since the privatisation of British Coal in 1994, the government has been providing a guarantee to the Mineworkers’ scheme, in return receiving half of any surplus generated from the guarantor’s fund.  

The investment reserve originally represented the guarantor's share of surpluses in the scheme in 1994, and it was intended that the remaining balance would be paid to the guarantor. However, as long as it remains in the MPS it can be used to support the guaranteed fund, which can dip into the investment reserve if needed, to fund pensions accrued before 1994.  

To date, the state has not had to contribute to the scheme and has received several billion under the surplus sharing, an arrangement pensioners and trustees say is poor value for money.   

From the guarantor’s fund, the state received payments of £142.4m in October 2022, and a further £142.4m was paid in October 2023. Under the current payment schedule, £142.4m is payable in 2024, £105.4m in 2025 and £80.2m in each of the three years from 2026 to 2028.  

MPs proposed in 2021 that the government should distribute £1.2bn it was due from the scheme to beneficiaries and change the contract so the public purse can only benefit if it has had to plug any deficit. Ministers, however, maintained that the surplus was a result of having the state backing, which it said allowed the scheme to take more investment risk.   

Aside from guaranteed pensions, the scheme also pays bonus pensions. In 2020, the MPS trustees secured an agreement with government to protect pensioner bonuses until 2023, with bonuses making up about a third of an MPS pension. The 2023 valuation of the scheme showed a large surplus, meaning members’ guaranteed pension will be increased by 19% via a new bonus, effective 23 September. It is paid in addition to an RPI increase of 2.9%.  

How should the MPS surplus arrangement be changed?