I understand that the Chairmen of the Mineworkers' Pension Scheme (MPS) Trustees and British Coal Staff Superannuation Scheme (BCSSS) Trustees were not remunerated by the schemes until 1995 in the case of the BCSSS and 1996 in the case of the MPS. The current rate of remuneration for chairing the Committee of Management for each scheme is £30,000 a year, an increase of 100 per cent. since inception. In addition, the current Chairman of the BCSSS receives an additional £5,000 for also chairing the Investment Sub-Committee. Other Trustees were not remunerated by the schemes until 1997 in the case of the BCSSS and 1999 in the case of the MPS. The current rate of remuneration for Trustees is £13,000 a year, an increase since inception of 73 per cent. in the case of the BCSSS and 53 per cent. in the case of the MPS. Additional remuneration is also payable to other Trustees for chairing sub-committees. This amounts to £7,000 a year for the Chairman of the Investment Sub-Committee and £2,000 a year for the Chairmen of other sub-committees.
I understand that, including the new bonuses payable from April 2007, BCSSS pensions in payment will have increased by 82 per cent. since 1994 and deferred pensions by 89 per cent. For MPS the increases, effective from September 2006, are just under 78 per cent. for pensions in payment and 83 per cent. for deferred pensions.
As part of the guarantee arrangements for these schemes the Government receives 50 per cent. of any surplus declared in the triennial actuarial valuations undertaken by the Government Actuary. The Government’s share of each surplus, if any, is paid out over 10 years. The other 50 per cent. is used to enhance members’ benefits. Between October 1994 and December 2006 the Government received £1,785 million in respect of such payments from the Mineworkers’ Pension Scheme (MPS) and £1,470 million from the British Coal Staff Superannuation Scheme (BCSSS). A further receipt of £242 million is expected from the BCSSS this month. In addition, the Government have used just over £68 million from the MPS Investment Reserve to fund lump-sum payments to members of the MPS on low pensions, and received £154 million from the BCSSS Investment Reserve, of which over £90 million has been used to fund pension liabilities inherited from British Coal. A further payment of 10 million from the BCSSS Investment Reserve is expected this month.
All payments to the Government as scheme Guarantor are reported in each scheme’s published Annual Report and Accounts. Copies of the latest reports are available on each scheme’s website
I understand that a report for the National Audit Office by Binder Hamlyn in 1995 suggested total gross payments to the Treasury from both schemes over 25 years of £8 billion.
The Investment Reserves are British Coal’s share of pre-privatisation surpluses that the Government agreed to leave in the schemes’ funds as part of the guarantee arrangements. Under the schemes’ provisions, and subject to the need to make good any deficits in the funds, they are due to be paid to the Government as guarantor over a period of 25 years from the Guarantee Date of 31 October 1994, or such longer period as the Government may from time to time determine. The Government have not extended this period. I understand that the trustees of each scheme will be looking at the potential effect of this on their investment strategies later this year as part of their regular review process.
The Government have guaranteed that the pensions to which scheme members were entitled at privatisation, increased each year in line with the retail prices index, will always be paid and that their total pension entitlement, including bonuses funded from the members’ share of surpluses, will never fall in cash terms. This guarantee applies, and will be honoured by the Government, regardless of the value of the investment reserves or the solvency of the schemes at any time.