Mineworkers' pensions

Privatisation in 1994

The government privatised British Coal in 1994. Before privatisation, British Coal had two main pension schemes:

• The Mineworkers’ Pension Scheme (MPS)
• The British Coal Staff Superannuation Scheme (BCSSS)

British Coal funded both schemes through pension contributions. If the schemes had a deficit, meaning the assets were not enough to cover the promised pensions, British Coal covered the shortfall.

After privatisation, the government guaranteed the pension in both schemes. The main parts of the agreement were:

• the government replaced British Coal as guarantor
• the schemes closed to future contributions
• the government agreed to share any surplus equally with the schemes.

The surplus sharing arrangement

When the government privatised British Coal in 1994, both the MPS and BCSSS had surpluses, meaning they had more assets than they expected to need to pay the schemes’ pensions.

The government and the schemes agreed to use half the surpluses immediately to improve members’ pensions. They placed the other half in investment reserves, which would gradually transfer to the government if the scheme did not use them.

The government and the schemes agreed to share any future surpluses equally.

The government agreed to end BCSSS’ surplus sharing arrangement in 2015. However, it continues to guarantee the scheme’s pension benefits.

Autumn Budget 2024

In the Autumn Budget 2024, the government announced it would review the MPS surplus sharing arrangements and transfer the remaining investment reserve to the scheme’s trustees. The trustees are responsible for ensuring the scheme is run properly and in the members’ interests.

The government said that transferring the investment fund to the trustees would “mean a 32% boost to the annual pensions of 112,000 former mineworkers – an average increase of £29 per week for each member.”

Budget 2025

Following the Autumn Budget 2024, BCSSS trustees sought similar improvements, highlighting the similarities between the schemes. At the Budget 2025 the government said it would transfer the BCSSS investment fund in the same way as it did for the MPS.

Payments to the government

Between October 1994 and July 2024, the government received £4.8 billion from the MPS and £3.1 billion from the BCSSS. The government is due a further payment of £1.9 billion from the BCSSS in 2033.

The government has made no direct payments to the MPS.

Payments to scheme members Pensions

In 2019, the average weekly pension from the MPS was £84. This consisted of:

• £65 guaranteed pension
• £19 bonus pension paid from surpluses.

One-off lump sums

Between 2002 and 2005, the scheme made one-off lump sum payments to members with the lowest pensions.

Bonus pensions

Under the original guarantee, bonus pensions could increase or decrease depending on the scheme’s funding. In November 2019, the government agreed to guarantee bonus pensions built up to that date.