§ Baroness Turner of Camdenasked Her Majesty's Government:
Whether the miners' pension scheme is slipping into deficit; if so, why they continue to deduct significant sums from the scheme; and whether, in the circumstances, the 1994 deal should be revised. [HL5171]
§ Lord Sainsbury of TurvilleThe results of the latest actuarial valuation of the mineworkers' pension scheme (MPS) have revealed a deficit. However, under the terms of the current guarantee arrangements over £350 million of government money has now been transferred from the investment reserve, a sub-fund in the scheme, to the main fund in the scheme to ensure members' guaranteed benefits are paid. The Government have also agreed to MPS members continuing to receive inflation linked increases to their total pension—basic pension plus bonuses—over the next three years.
The government guarantee ensures that miners' pensions as at privatisation will always rise in line with inflation and never fall in cash terms even if, as now, there is a significant deficit in the scheme. In exchange for the guarantee, the Government receive a 50 per cent share of any scheme investment surplus created by past valuations. The other 50 per cent of surpluses is available for the trustees to distribute to members and has meant that members have, over the years, received bonuses totalling around 30 per cent.
Against the background of large falls in world stock markets, which have had a major effect on investment performance as highlighted by the deficit in the MPS, the trustees have been advised that the Government do not feel it would be right to change the current arrangements which provides such an unprecedented degree of security for scheme members.