Former miners to face cuts of £1.5bn blocked in pension scheme ‘scandal’ | Personal Finance

More than 100,000 former miners will have £1.5 billion withdrawn from their pensions as part of the Government’s efforts to address a “historical injustice”.

Following the announcement in yesterday’s Budget, Energy Secretary Ed Miliband confirmed the move would mean a 32% increase in the annual pensions of 112,000 former miners – an average increase of £29 a week for each member.

The Mineworkers’ Pension Scheme Investment Reserve Fund, set up in 1992 with proceeds from the scheme, was originally intended as a financial buffer in case the scheme faced a deficit. This fund was originally planned to be returned to the government by 2029.

However, after years of campaigning by former miners and their families, it was decided that the reserve would be transferred directly into the pension scheme, benefiting its members.

Following the privatization of British Coal in 1994, the government accepted an agreement to receive half of any profits generated by the scheme in exchange for a guarantee that pensions would rise with inflation.

Since this scheme has worked consistently well, the government has not yet allocated funds for it. In response, the government is reviewing the arrangement in an effort to offer a fairer deal to former miners and their families; further details are expected in the coming months.

Mr Miliband said: “We owe a debt to the mining communities that fueled this country. For decades, it has been a scandal that the government has taken money that could have been given to miners and their families.

“Today this scandal is over, and the money has rightfully been transferred to the miners. I pay tribute to the campaigners who fought for justice: today is their victory.”

Industry Minister Sarah Jones said: “Miners have powered our industries and our homes for decades. That’s why we must right the wrong that deprived them of the decent pension they deserve.

“We are handing over £1.5 billion that has been sitting in reserve for years and not being used when people need it most. This will end a historical injustice and provide scheme members with an average pay increase of £29 per week – an increase of 32%.”

Gary Saunders, Chairman of the Board of Trustees of the Miners’ Pension Scheme, commented: “As a Board of Trustees, we are delighted that we will be able to put more money into the pockets of our members. We are also grateful to the many members and MPs who have supported the Scheme on this issue over the years.”

Allen Young, Trustee Representative for North East England Pensioners and Overseas Members, said: “The Government’s decision to deliver on this part of its manifesto commitment to the Scheme is a very positive development for our members.

“The Trustees will be using the Investment Reserve to enhance our members’ pensions and we will be writing to all members with good news shortly.”

The trustees are responsible for deciding how the £1.5 billion fund will be distributed among its 112,000 members and are now actively working to include the bonus in pension packages from November this year.