More than 100,000 former mineworkers will receive £1.5billion of money kept from their pensions in a Government effort to overturn a “historic injustice”.
Following the announcement in yesterday’s Budget, Energy Secretary Ed Miliband confirmed that the move would mean a 32% boost to the annual pensions of 112,000 former mineworkers – an average increase of £29 per week for each member.
The Mineworkers’ Pension Scheme’s investment reserve fund, created in 1992 with profits from the scheme, was initially intended as a financial buffer should the scheme enter deficit. This fund was originally slated to return to the Government by 2029.
However, after years of campaigning by former mineworkers and their families, it has now been decided that the reserve will be transferred directly to the pension scheme, benefiting its members.
Following British Coal’s privatisation in 1994, the Government arranged to take half of any profits generated by the scheme in exchange for a guarantee that pensions would rise with inflation.
As the scheme has consistently performed well, the Government has yet to contribute funds to it. In response, the Government is reviewing this arrangement, aiming to offer a fairer deal to former miners and their families, with further details expected in the coming months.
Mr Miliband said: “We owe the mining communities who powered this country a debt of gratitude. For decades, it has been a scandal that the Government has taken money that could have been passed to the miners and their families.
“Today, that scandal ends, and the money is rightfully transferred to the miners. I pay tribute to the campaigners who have fought for justice- today is their victory.”
Minister for Industry Sarah Jones said: “Miners powered our industries and our homes for decades. That’s why we have to right the wrong that has denied them the decent pension they deserve.
“We are handing over the £1.5 billion that for years has sat in the reserve fund unused at times when people needed it most. This will end a historic injustice and will ensure members of the scheme see an average increase of £29 per week added to their pay – an increase of 32%.”
Gary Saunders, chair of the trustees of the Mineworker’ Pension Scheme, commented: “As a Trustee board we are delighted we will be able to put more money in our members’ pockets. We are also grateful to the many members and MPs who have shown support of the Scheme on this matter over the years.”
Allen Young, pensioner representative trustee for the North East of England and Overseas members, said: “The Government’s decision to make good on this part of its manifesto commitment in respect of the Scheme is a very positive development for our members.
“The Trustees will use the Investment Reserve to increase our members’ pensions and we will be writing to all members with the good news very shortly.”
The trustees are responsible for deciding how the £1.5billion fund is distributed amongst their 112,000 members and are now working at speed to deliver the bonus into pension pay packets from November this year.
