BCSSS issue ‘needs to be remedied’, says Miliband
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The energy and climate change secretary, Ed Miliband, has said that “the injustice that has been remedied” in the Mineworkers' Pension Scheme by paying out an investment reserve also “needs to be remedied” in the British Coal Staff Superannuation Scheme. Industry minister Sarah Jones has promised to talk to the Treasury about the matter.
The BCSSS trustees met with Jones on 16 December to discuss their demand for a £2.3bn investment reserve to be handed over. Jones said she would raise the issue across the government before Christmas, according to the scheme.
The BCSSS trustees asked for the reserve after the government paid £1.5bn to the MPS last year and want a review of how any future surplus is shared, as the government is currently looking at the 50/50 surplus sharing arrangement in the MPS. The changes to the MPS were election promises made by Labour, but the BCSSS was not mentioned in the manifesto.
The BCSSS trustees met with Jones on 16 December to discuss their demand for a £2.3bn investment reserve to be handed over. Jones said she would raise the issue across the government before Christmas, according to the scheme.
The BCSSS trustees asked for the reserve after the government paid £1.5bn to the MPS last year and want a review of how any future surplus is shared, as the government is currently looking at the 50/50 surplus sharing arrangement in the MPS. The changes to the MPS were election promises made by Labour, but the BCSSS was not mentioned in the manifesto.
‘Read-across’ from MPS
On 17 December, Miliband was asked by several Labour MPs what steps he is taking to ensure former British Coal employees are treated equitably compared with former pit workers.
Miliband replied to one MP's question saying he is “right about the read-across and the sense that the injustice that has been remedied in the MPS needs to be remedied in the BCSSS”, adding that “there is also a real need for speed”.
This is why Jones is “on the case”, he said and observed that the MPS reserve was paid out within five months of Labour coming to power.
A Department for Energy Security and Net Zero spokesperson told mallowstreet: “Minister Jones recently met with trustees of the BCSSS and has committed to talking to the Treasury about their proposals.”
The spokesperson noted that the BCSSS “operates in a different way to the Mineworkers' Pension Scheme, as agreed with the scheme trustees”, stressing that 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 said.
BCSSS scheme secretary Karen Barton said that “100% of surplus in BCSSS stays in the scheme, so effectively accrues to the government”.
A Department for Energy Security and Net Zero spokesperson told mallowstreet: “Minister Jones recently met with trustees of the BCSSS and has committed to talking to the Treasury about their proposals.”
The spokesperson noted that the BCSSS “operates in a different way to the Mineworkers' Pension Scheme, as agreed with the scheme trustees”, stressing that 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 said.
BCSSS scheme secretary Karen Barton said that “100% of surplus in BCSSS stays in the scheme, so effectively accrues to the government”.
The trustees said that the developments are “a positive step” and are encouraging members to raise the matter with their local MP.
The UK government has received £3.1bn from the British Coal scheme and £4.8bn from the MPS since it started backing the two schemes in 1994. It is due a further payment of £1.9bn from the BCSSS in 2033, according to a Commons research briefing from last month.
Previous governments have refused to change the arrangements, arguing that the guarantee has allowed the schemes to adopt a higher risk investment strategy than they could have otherwise, resulting in the current surpluses.
However, there has been criticism of how these surpluses have been calculated, with some saying a different discount rate would have shown a less favourable picture.
The UK government has received £3.1bn from the British Coal scheme and £4.8bn from the MPS since it started backing the two schemes in 1994. It is due a further payment of £1.9bn from the BCSSS in 2033, according to a Commons research briefing from last month.
Previous governments have refused to change the arrangements, arguing that the guarantee has allowed the schemes to adopt a higher risk investment strategy than they could have otherwise, resulting in the current surpluses.
However, there has been criticism of how these surpluses have been calculated, with some saying a different discount rate would have shown a less favourable picture.
The discussions about handing surplus to pension scheme members come after the government has come under fire, including by some of its own MPs, for means-testing the winter fuel allowance for state pensioners.
What is the case for and against paying the investment reserve to the BCSSS trustees?
