BCSSS trustees ask government to pay out £2.3bn
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The trustees of the British Coal Staff Superannuation Scheme have asked the government to hand over the scheme’s investment reserve of £2.3bn and to commit to a review of surplus sharing.
The demands follow the changes made to the Mineworkers’ Pension Scheme, which recently received its £1.5bn investment reserve and was assured the surplus sharing would be looked at.
Before the 2024 general election, Labour had promised to review the MPS arrangement but had remained silent about its white-collar equivalent, the BCSSS. The BCSSS trustees have since tried to convince the government to replicate the MPS deal and have now written to industry minister Sarah Jones asking for an in-person meeting.
“In our second letter, we asked that members of BCSSS be treated equally to members of MPS,” the trustees said.
The BCSSS trustees are asking that the government transfer the £2.3bn investment reserve to its roughly 41,000 members “as soon as possible” and commit to a review of how any future surplus is dealt with.
In October, a spokesperson for the Department for Energy Security and Net Zero told mallowstreet that it would consider proposals that are fair to both scheme members and taxpayers, but the department seems to be taking a less accommodative stance now.
A spokesperson said: “The British Coal Staff Superannuation Scheme operates in a different way to the Mineworkers' Pension Scheme, as agreed with the scheme trustees. The government has taken no money from the scheme’s surpluses since 2015. All of that surplus is used purely to fund future pensions.”
The spokesperson added, that “we must consider the two schemes separately”, but reiterated that the department was “open to considering” any proposals for changes the trustees make.
At the MPS, the transfer of the investment reserve to over 110,000 members resulted in a 32% bonus pension. Through the MPS surplus sharing, the Treasury previously received several billion pounds from the scheme.
The move to hand the investment reserve to pensioners was welcomed by the National Union of Mineworkers but received criticism from some, including pensions commentator John Ralfe. Writing in the Telegraph newspaper in November, Ralfe said the pensioners had received all benefits promised to them under the scheme rules, implying they were not entitled to any of the surplus that has arisen.
He also suggested the MPS used ‘expected return on assets’ to discount liabilities, instead of AA corporate bonds. The scheme’s 2017 and 2020 valuations would have shown a considerable deficit had the more commonly used bond rates been applied, he argued. According to MPS accounts, the £7.4bn Guaranteed Fund had a small deficit of £34m and the £1.8bn Bonus Augmentation fund had a shortfall of £190m in 2020. Though carried out triennially by the Government Actuary’s Department, MPS valuations have an outcome period of six years, meaning the 2020 results did not affect how money was moved between the different funds of the MPS. The 2023 valuation results have not been released. According to the government, they show a £1.1bn surplus.
The chair of the MPS trustees, Gary Saunders, said the trustees stand by the independent valuation and support the government’s response to the coverage in the Telegraph which speaks of a historic injustice.
The BCSSS did not provide further comment. GAD declined to comment.
The demands follow the changes made to the Mineworkers’ Pension Scheme, which recently received its £1.5bn investment reserve and was assured the surplus sharing would be looked at.
Before the 2024 general election, Labour had promised to review the MPS arrangement but had remained silent about its white-collar equivalent, the BCSSS. The BCSSS trustees have since tried to convince the government to replicate the MPS deal and have now written to industry minister Sarah Jones asking for an in-person meeting.
“In our second letter, we asked that members of BCSSS be treated equally to members of MPS,” the trustees said.
The BCSSS trustees are asking that the government transfer the £2.3bn investment reserve to its roughly 41,000 members “as soon as possible” and commit to a review of how any future surplus is dealt with.
In October, a spokesperson for the Department for Energy Security and Net Zero told mallowstreet that it would consider proposals that are fair to both scheme members and taxpayers, but the department seems to be taking a less accommodative stance now.
A spokesperson said: “The British Coal Staff Superannuation Scheme operates in a different way to the Mineworkers' Pension Scheme, as agreed with the scheme trustees. The government has taken no money from the scheme’s surpluses since 2015. All of that surplus is used purely to fund future pensions.”
The spokesperson added, that “we must consider the two schemes separately”, but reiterated that the department was “open to considering” any proposals for changes the trustees make.
At the MPS, the transfer of the investment reserve to over 110,000 members resulted in a 32% bonus pension. Through the MPS surplus sharing, the Treasury previously received several billion pounds from the scheme.
The move to hand the investment reserve to pensioners was welcomed by the National Union of Mineworkers but received criticism from some, including pensions commentator John Ralfe. Writing in the Telegraph newspaper in November, Ralfe said the pensioners had received all benefits promised to them under the scheme rules, implying they were not entitled to any of the surplus that has arisen.
He also suggested the MPS used ‘expected return on assets’ to discount liabilities, instead of AA corporate bonds. The scheme’s 2017 and 2020 valuations would have shown a considerable deficit had the more commonly used bond rates been applied, he argued. According to MPS accounts, the £7.4bn Guaranteed Fund had a small deficit of £34m and the £1.8bn Bonus Augmentation fund had a shortfall of £190m in 2020. Though carried out triennially by the Government Actuary’s Department, MPS valuations have an outcome period of six years, meaning the 2020 results did not affect how money was moved between the different funds of the MPS. The 2023 valuation results have not been released. According to the government, they show a £1.1bn surplus.
The chair of the MPS trustees, Gary Saunders, said the trustees stand by the independent valuation and support the government’s response to the coverage in the Telegraph which speaks of a historic injustice.
The BCSSS did not provide further comment. GAD declined to comment.
