MPs urge UK Government to fix 'historic injustice' in mineworkers' pension scheme

Former mineworkers in Wales who say they are languishing on low pensions have welcomed a report recommending that £1.2 billion should be paid out by the UK Government.

The Business, Energy and Industrial Strategy Committee (BEIS) branded the scheme an "historic injustice", with pensioners struggling to make ends meet while the UK Government makes a profit year-on-year.

The committee said, given the "vast sums" paid from the scheme to the Government, it was "unconscionable" that miners were struggling.

The move would give a £14 increase to the average weekly pension of £84, according to MPs - welcome news for miners who have been campaigning on the issue since 1994.

The committee said that since privatisation of the scheme in 1994 the UK Government has received 50% of surpluses in its value, in return for providing a guarantee that the value of pensions will not decrease.

At the time it was expected that the UK Government would receive around £4 billion from the arrangement in today's money, but that has increased to £4.4 billion, and the Government is also due to receive at least another £1.9 billion on top of 50% off any future surpluses, said the report.

The Government has not paid any funds into the scheme in return, noted the MPs.

The report said the Government's entitlement to 50% of surpluses "is not proportionate to the degree of financial risk it actually faces."

Committee chairman Darren Jones said: "Whilst the Government's guarantee to the pension fund has provided vital security to Mineworkers' Pension Scheme members, it's clear that the Government has profited to a far greater extent than originally envisaged.

"That now needs to change.

"The Government should now act quickly on our recommendations by agreeing to hand back more of future surpluses to pensioners and delivering an immediate uplift through the return of the £1.2 billion investment reserve."

Miners have welcomed a report recommending their pensions should be topped up. Credit: PA Images

Former miner Martin Parsons is among the Welsh campaigners who welcome the recommendation.

"It's a huge sum of money. And for that to come to our members, it would be a huge relief for them," he added.

Martin is retired, but he still has to work as a security guard to top up his pension.

"When you retire, you'd like to sit back and relax - or at least have a decent standard of living," he said.

"You can't achieve that if you're not having an appropriate pension. It means, for me, I've got to carry on working."

Martin points out he is one of the lucky ones still able to work - many former miners have serious health complaints as a result of years of toil down the pits, and can no longer work.

Former miners - pictured here outside 10 Downing Street - have campaigned for years for fairer pensions.

The report quoted evidence from Chis Cheetham, chairman of the trustees, who said: "Fifty per cent of members have a pension of less than £65 a week, 25% less than £35 a week, and 10% less than £18 a week.

"When you think about those numbers, it explains why there is so much frustration and anger over the huge sums of money the Government have taken out of the scheme."

A UK Government spokesman said: "Mineworkers' Pension Scheme members are receiving payments 33% higher than they would have been thanks to the Government's guarantee.

"On most occasions, the scheme has been in surplus and scheme members have received bonuses in addition to their guaranteed pension.

"We remain resolutely committed to protecting the pensions of mineworkers, are carefully reviewing the findings of this report, and will consider all recommendations made."

Chris Kitchen, general secretary of the National Union of Mineworkers, said: "We urge the Government to accept the recommendations and allow the trustees to redress the unfair imbalance.

"Mineworkers who paid money into the scheme should be the ones that benefit, not governments that have never put a penny in."