The Treasury has decided to transfer a £2.3bn investment reserve held for the British Coal Staff Superannuation Scheme to the scheme’s trustees, who will use it to give a 41% bonus to about 45,000 former managers and support staff working in the coal industry.  

The government has decided to favour its former supporter base, which is now flirting with Reform UK – Reform’s Lee Anderson is himself a BCSSS member – by handing an investment reserve of about £2.3bn to the taxpayer-backed BCSSS. By 2030-31, it expects to have paid out just over £2bn. 
   

 

Last year, the Labour government transferred the £1.5bn investment reserve it held to cover liabilities of the 119,000 members in the Mineworkers’ Pension Scheme to the MPS trustees, who used the money to provide pension bonuses. Giving the MPS the reserve – as well as reviewing a 50/50 surplus sharing arrangement put in place in 1994 – was a manifesto commitment, but Labour had made no mention of BCSSS in its election manifesto. 
   

   

The BCSSS trustees, which have been lobbying intensely for the assets to be transferred and surplus sharing to be changed in their scheme, told their roughly 45,000 members: “The government has approved a new bonus pension equal to 41% of your guaranteed pension, backdated to 1 November 2024.”   

The statement was issued on Wednesday afternoon, with the trustees having only formally been notified of the government's decision in the preceding 24 hours.  

They said the backdating is down to the fact that the Mineworkers’ members received their bonuses from last November. The new bonus pension will remain fixed.  

The percentage is “lower than the trustees initially proposed because the government decided to take a more cautious approach”, but the transfer of the full reserve “paves the way for discussions about surplus sharing next year”, the trustees said. 

It is unclear how the payment of the bonus pension is taxed. For defined benefit surplus in private sector schemes paid directly to members, a legislative change will reduce the unauthorised tax charge, for members over pension age, that would normally apply.
 

   

BCSSS is not the only scheme mentioned in the Budget.
  

On Wednesday, it confirmed £2bn of “further asset disposals... by ensuring its liabilities are funded in the most efficient way”, meaning the £1.3bn Atomic Weapons Establishment pension scheme – along with the Nuclear Liabilities Fund – "will no longer be pre-funded". 

The government will look for further asset disposals saying it will launch a Strategic Asset Review to report before the next spending review, which will identify “opportunities to monetise assets and address barriers to disposals”. 

In 2022, former defence procurement minister Jeremy Quin noted that the Ministry of Defence has agreed to provide a guarantee to the AWE Pension Scheme.

"In granting the guarantee, MoD and HMT have collectively agreed in principle, subject to applicable regulations and law, to bring the scheme’s assets and liabilities into central government control," he added, subject to a feasibility study.

At its 2023 funding update, the AWE scheme's situation had deteriorated, recording a deficit of £98m. The trustees told members that "this should not be of any concern due to the existence of the Crown guarantee".