MINEWORKERS’
PENSION SCHEME
Index
Foreword
Background to the Scheme as it is today Benefits on Retirement
The pension calculation - Guaranteed Benefits The pension calculation - Bonuses
Annual increases - pension in payment Pensions and inflation (or deflation) Increases and bonuses
Payment of pension Changes in circumstances
Confirming continuing entitlement to benefits Taxation considerations
Information for Deferred Members
Increases to deferred pensions Bonuses
When pension is due for payment Early retirement choices
Tax treatment of pensions Lump sums
Trivial commutation Statements
Transferrring out of the MPS
Death Benefits
Pension benefits payable
Members who left the Scheme before 6 April 1978 Members who left the Scheme after 6 April 1978 Civil Partners
Other dependants
Establishing entitlement to benefit on death - alternative beneficiaries Children’s allowances
Lump sums on death
Other Useful Information
Additional Voluntary Contributions Transfers into the Scheme Payee arrangements Discretionary benefits Divorce 3 4 5 10 14 17
Index
Trustees and Scheme Management
The Committee of Management Appointment of Trustees Trustee Elections
What are the Trustees’ duties and responsibilities? The Sub-committees
Other Trustee Groups The Trustees’ Office The Scheme’s Advisers The Scheme’s Administrators The Government guarantee The Sub-funds
Valuations, Bonuses and other benefit improvements
Retirement Income
General notes about the Scheme and Retirement Income The State Pension Scheme
Income Related State and Council benefits Assignment of benefits/Court Orders
Scheme Publications
Data Protection
Useful Contacts
Pension Queries Questions about tax
For more information about the Scheme
Coal Industry Social Welfare Organisation (CISWO) Problems and complaints
The Pensions Advisory Service The Pensions Ombudsman The Registrar of Pension Schemes The Pensions Tracing Service
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Foreword
The legal document which governs the operation of the Scheme is the Mineworkers’ Pension Scheme Rules. This is a document which started as a set of Government Regulations laid under the Coal Industry Act 1994. Since 1994, all changes to the Rules of the Scheme have been made by Government, after consultation with the Committee of Management. Other relevant provisions are contained in the Government Guarantee, the constitution of the Trustee Company and the general law covering pension schemes.
This Handbook is a guide to the main terms of the Scheme Rules, which apply to pensioners and deferred pensioners, and it should be treated only as a guide. It is correct at the time of printing, but may be revised in the future in the light of changes to the Scheme, changes to the law and regulations governing pension schemes.
The Rules of the Mineworkers’ Pension Scheme, and other legal documentation, contain the Scheme’s full provisions and override this Handbook in the event of any inconsistency. A copy of the up to date version of the Rules is available from the administration office. The original Regulations are available from HMSO under the reference S.I. 1994 No 2577. References in this Handbook to employment with British Coal include employment with any other employer which entitled coal industry employees to a pension under the Scheme. This handbook reflects pensions and taxation law and practice as at the end of 2009. However, please be aware that these may change in the future.
As well as this Handbook there are other publications and reports which give more information about the Scheme. These can be obtained on request from the Administration Office, or can be accessed via the Scheme’s website, which provides information and news all in one place. It also provides links to other sites which may be of interest to coal industry pension scheme members.
Background to the Scheme as it is today
The MPS came into effect on 1 January 1952. Membership was made compulsory from 3 April 1961.
Benefits earned before 6 April 1975 were relatively small and until April 1990, these benefits did not increase, either before or after they went into payment.
The benefit structure of the Scheme was significantly revised from 7 April 1975, when it became an earnings related, final salary scheme. After 6 April 1975, as contributions changed from a flat rate to an earnings related basis, the Scheme was able to provide better benefits than before as a result of the higher contribution level.
Refunds of contributions, paid as small lump sums, have been payable in certain circumstances - usually as a result of having relatively short service. Any member who was entitled to a refund of contributions was notified at the time of leaving the MPS. Where a refund was paid, no further benefits would be payable for that particular period of membership.
Scheme membership was voluntary in most cases Scheme membership was compulsory
Scheme membership was 1 January 1952 to
3 April 1961 4 April 1961 to 6 April 1975 7 April 1975 to
Maximum of 7.5p per week
Maximum of 20p per week
5% of pensionable earnings
Date Membership MPS Contribution rate
The following table shows eligibility for membership
and contribution rates:
Since the MPS was introduced, it has changed significantly in structure. This section summarises those changes, and sets out the calculation basis for MPS benefits. The benefits payable to Scheme members vary because each member’s circumstances are different.
Benefits on Retirement
The level of benefits the Scheme can pay depends on four factors
which will vary between individual members.
These are:
●the length of MPS service;
●the reason for termination of employment, ●the date of leaving the Scheme, and ●the contributions paid to the Scheme. The following paragraphs give a general description of how pensions at retirement are worked out. For more specific information on the calculation of individual benefits, please contact the Administration Office.
The pension calculation - Guaranteed Benefits
Scheme benefits are made up of a number of elements. Part of the pension is guaranteed, and the remainder is paid in the form of bonuses.
The amount of pension is calculated by reference to the four factors above, but will always be a fixed rate pension amount, paid four weekly, quarterly or annually.
Benefits earned for contributions paid to the Scheme before 7 April 1975
Contributions were made on a ‘flat rate’ basis. Members paid fixed amounts of pension contributions, which were not related to their earnings. The maximum level of contribution up to April 1975 was never more than 20p a week. The pension earned for membership between 1952 and 7 April 1975 would never be more than £2.00 per week.
Benefits earned for contributions after 6 April 1975
For members who left service after 7 April 1975, pension payable at the Scheme’s pensionable age is based on pensionable earnings, contributing service and the accrual rate, all of which are explained further below.
Pensionable earnings are normally an average of the highest three consecutive full tax years’ earnings (revalued in line with inflation) out of the last thirteen years of Scheme service since 6 April 1975.
Contributing Service, which is a member’s total Scheme service after 6 April 1975, plus any service transferred into the Scheme from another pension scheme, and any additional service credit due following the 1992 and 1994 valuations of the Scheme. Any period of strike absence when Scheme contributions were not repaid does not count as Contributing Service and is not included in the pension calculation.
Accrual Rate, which is the rate at which the pension earned after 6 April 1975 built up. The Accrual Rate used in the benefit calculation depends on the date a member left the Scheme, as shown below:
Date of leaving the Scheme: Accrual rate is:
7 April 1975 - 31 March 1990 1/90th 1 April 1990 - 29 February 1992 1/80th
Benefits on Retirement
Depending on the date they left and the reason for leaving, some members receive:
Any additions that are due are automatically added to pensions and do not have to be claimed separately.
The pension calculation - bonuses
The remaining part of the pension is paid in the form of bonuses, which arise from surpluses from past valuations. Bonuses are additional pension amounts which are paid with the Guaranteed benefits. Bonuses awarded from previous valuations cannot be guaranteed and in some circumstances, explained more fully on page 8, they might reduce.
left after 1 March 1992;
had 17 years of Scheme membership; and
based on the calculation explained on page 5, had pensionable earnings of £20,000, then his pension entitlement would be calculated as follows:
£20,000 x 17 = a pension of £5,667 per year, or a weekly pension of £108.98 60
a make-up to a minimum rate - generally, where a member took age or incapacity retirement or redundancy retirement over a certain age;
a value for money addition, which ensures that the benefits due to members who left before normal pensionable age represented fair return for their contributions. At retirement, actual earned benefits, plus any increases added to the pension before it becomes due for payment, are compared with the level of the value for money pension. If the earned pension does not, in the opinion of the Trustees, provide value for money for the contributions paid, the higher of the two is payable;
an award of additional contributing service, for members made redundant between 11 March 1981 and 29 March 1987, and who were aged between 50 and 59 at the date of redundancy.
● ●
●
For example, if a member:
The Guarantee arrangements protect members’ benefits, ensuring that there is no reduction in total benefits in cash terms even during a prolonged valuation deficit period, when pensions stand still.
The GMP is not an additional pension; it is a minimum level, calculated by the State. If a member contributed to the MPS after 5 April 1978, the Scheme pension is compared against the GMP to ensure that it is no less than the GMP. If it is less, it would be increased to the same value as the GMP.
As previously explained, bonuses arise from surpluses from past valuations. They are not generally increased in the autumn.
Benefits on Retirement
Annual increases - pensions in payment
Pensions are made up of three components: ●Guaranteed benefits;
●any Guaranteed Minimum Pension element; and ●Bonuses
Guaranteed benefits are the part of pension built up during service in the industry. Guaranteed benefits receive full annual increases in line with any increase in the cost of living as measured by the Retail Prices Index (RPI).
Any increase is normally applied by the Scheme in the autumn. In years where RPI is less than zero, as it was in 2009, for example, the Rules ensure that any fall in RPI will not result in a reduction in a member’s total pension.
Where a member contributed to the MPS after 5 April 1978, the MPS undertook that, from State Pensionable Age, the Scheme would pay at least a minimum level of pension, called the Guaranteed Minimum Pension (GMP), which replaces a comparable benefit otherwise payable from the State. The Scheme pays all the increases on any MPS pension in payment before the GMP becomes payable. Once GMP becomes payable, the Scheme increases any GMP earned after 5 April 1988 by the increase in the cost of living up to 3% each year. The pension increase on the pre April 1988 GMP and any pension in excess of 3% on the post 1988 GMP will be added to the State pension by the Benefits Agency when the State pension increases. These increases are effective from 6 April each year.
The autumn RPI increase does not apply to bonuses, or to any Guaranteed Minimum Pension element.
At the date this Handbook was published, State Pension Age is 65 for men and 60 for women. From April 2010, State Pension Age for women will begin to gradually increase so that by 2020, State Pension Age will have been equalised for men and women, at age 65.
The GMP should not be confused with the Guaranteed benefit element which forms part of the benefits payable by the MPS.
Benefits on Retirement
Increases and bonuses
Bonuses added to pensions are not generally increased, though flat rate bonuses have been (and in the future will be when affordable) added to Guaranteed benefits with the aim of keeping members’ benefits increased in line with inflation.
Bonuses already awarded came from surpluses in the Scheme after 1994. Bonuses have been added to pensions in 1997, 2000 and 2006 when reviews showed that there were surpluses in the Scheme. Continuing payment of bonuses is not guaranteed; bonuses are likely to decrease if a review shows that there is a large deficit in the Scheme, although overall pension cannot be reduced in cash terms, as previously explained.
Payment of pension
MPS pensions are normally payable every four weeks, that is two weeks in advance and two weeks in arrears. For small pensions, payment is made quarterly or annually. Pensions are usually paid into a member’s UK bank or building society account by direct credit from the Scheme’s bank account. Payment by cheque or girocheque is no longer available.
Where a member is living abroad, payments can be made to an overseas account but there may be additional bank charges. The Scheme offers an option to pay pensions to those living overseas quarterly or annually so as to reduce these costs and exchange rate losses.
Pensions and inflation (or deflation)
As explained on page 7, the Rules provide for Guaranteed benefits to increase each year by the increase in the Retail Prices Index (RPI) measured over the period June to June. In 2009, for the first time since MPS became a closed Scheme in 1994, the change to the RPI was negative (-1.6%). The Rules of the Scheme state that pensions cannot be allowed to fall and Guaranteed benefits will stand still even when the RPI change is negative. The Rules also state that any increases in RPI in subsequent years must be offset against negative RPI in earlier years. This means that annual increases on Guaranteed benefits can only begin again once future RPI increases are more than the previous falls, though the Trustees’ aim is always to try and increase pensions in line with any increase in the RPI by awarding bonuses (when funding permits) to top up the Guaranteed benefit entitlement.
Benefits on Retirement
Confirming continuing entitlement to benefits
Taxation considerations
Pensions in payment are taxed under PAYE, although lump sums paid from the Scheme are generally free of tax. If a member has another pension arrangement which has yet to come into payment, he may be asked how much of his Lifetime Allowance is taken up by MPS benefits before that pension can be paid without incurring very high tax charges. More information about the Lifetime Allowance is covered in the next section but if a member’s pension is already in payment he can work out the value of his MPS benefits against the Lifetime Allowance by multiplying his annual pension by 25 and, if he left the MPS before 1 March 1992, adding any separate lump sum. If a member retired after 5 April 2006, the Lifetime Allowance figure will have been quoted on his retirement statement.
Changes in circumstances
In most cases, pensions are payable for life, unless they were paid on the understanding that payment would only continue while the recipient meets certain qualifying conditions - for example, where a pension is being paid for the duration of a child’s education, or where a Serious Ill Health pension was awarded. Since 1979, widow’s benefits have been payable for life, even after re-marriage. However, the Scheme will need to be informed about the re-marriage in order to make sure we are making payments, and addressing correspondence, correctly.
Some changes in circumstances will affect payment of pension. All of the changes listed below should be reported to the Scheme’s administrators, who will confirm whether they affect the benefits payable.
What changes should be reported?
Deaths - including the death of a Scheme member, a dependant or a deferred member Changes of address
Closure of a bank account, or a change of account number A move to a retirement home, or to a nursing home
A return to work, where Serious Ill Health Benefits were awarded Remarriage
If a child leaves school, or reaches age 21 if before (if a child’s pension is in payment) A divorce
A change of name
Our administrators make regular checks with a specialist tracing agency to ensure that the Scheme is advised where the death of a pensioner might have gone unreported. If we receive a report of a death, and we are not contacted by the next of kin within a reasonable period, we will write to our pensioner’s address to confirm the position.
It is important, and in the interest of all members, that Scheme benefits are paid only to those who are entitled to receive them. The Trustees are responsible for looking after the assets of the Scheme for every member. The Trustees would be accountable to members if they did not take action to recover overpaid benefits. If fraud is involved, the Trustees will pursue the return of any money received fraudulently and, if necessary, take legal action to recover it.
Failure to notify the Administration Office of a change could result in an overpayment of Scheme benefits. In all cases, the Trustees have a duty to recover overpayments of MPS benefit and will take whatever action they consider necessary to recover overpaid money.
Information for Deferred Members
Increases to deferred pensions
Deferred pensions increase before and after retirement. Increases to pensions in payment are described on page 7. This section explains how pension will increase before retirement. Deferred pensions are made up of three components:
●Guaranteed Minimum Pension (GMP) (for those members who contributed after 6 April 1978);
●An increasing component (the increasing pension); and ●A non-increasing component (the non-increasing pension).
Before retirement, the GMP will increase broadly in line with the rate of increase of National Average Earnings.
The increasing pension, which includes benefits earned during Scheme membership (but excluding any GMP element) and any additional benefits awarded from surplus before privatisation, will increase in line with price inflation as measured by any annual increase in the Retail Prices Index. All of these increases are provided by the Scheme.
The non-increasing pension is made up of bonuses awarded from surpluses after 1994. No increase will be paid on this part of the pension, although (as with pensions in payment) new bonuses may be paid in future to help keep total pension in line with retail price changes.
Bonuses
Bonuses have been added to deferred pensions in 1997, 2000 and 2006 when reviews showed that there were surpluses in the Scheme. These bonuses are not guaranteed and do not increase annually.
Continuing payment of bonuses is not guaranteed; bonuses can actually decrease if a review shows that there is a large deficit in the Scheme, although overall pension will not be reduced.
When pension is due for payment
Full pension is payable from age 60, the Scheme’s normal pensionable age. Three months before a member’s 60th birthday, the Administration Office will confirm the amount of benefits payable and the arrangements which need to be made in order to draw them. If a member has not heard from the Administration Office two months before his 60th birthday, he should contact the Administration Office directly.
Information for Deferred Members
Tax treatment of pensions
Up to 6 April 2006, the MPS was an ‘exempt approved scheme’ for the purposes of the Income and Corporation Taxes Act 1988. The Scheme’s exempt approved status meant that pension contributions were not treated as taxable earnings, cash lump sums on retirement and death were tax-free and both the investment income from the fund, and the growth in value of investments, were mainly exempt from tax.
In exchange for these tax advantages, the benefits that the Scheme provided were subject to certain limits, based on salary and service. MPS benefits generally fell well within these limits and for most members could be paid with no restrictions.
Since 6 April 2006, the HMRC limits on contributions and benefits from approved pension schemes have been replaced with allowances, up to which tax treatment remained favourable. The MPS became a Registered Pension Scheme. All types of registered pension schemes come under one set of regulations. For most people, the 2006 tax regime applies to all sources of pension income, except State pensions.
The Lifetime Allowance, introduced in 2006, applies to all pensions savings, replacing the previous rules for different types of pension arrangements. The allowance applies to the total value of benefits from all registered schemes, not just MPS, at the time benefits are put into payment. Initially, the Lifetime Allowance was set at £1.5 million; for the tax year 2009/2010, the allowance is £1.75 million.
A member who has not yet drawn his pension can work out the value of his MPS benefits against the Lifetime Allowance by multiplying the annual deferred pension by 20 and, if he left the MPS before 1 March 1992, adding any separate lump sum.
Members who think their total pension entitlements may amount to over £70,000 a year, or over £1.75 million in value - or are close to that figure - can download a factsheet from the Scheme’s website, which explains the taxation of pensions in more depth. A copy of the factsheet is also available on application to the Administration Office.
Early retirement choices
Benefits can be taken before age 60, at a reduced rate. For the majority of MPS members, the earliest age at which reduced benefits can be taken is age 50. However, during 2010, the earliest age at which reduced benefits in most UK pension schemes can be taken will increase from age 50 to age 55. In the MPS, where members had an unconditional right to a reduced pension at 50, they will retain that right.
MPS members who were reinstated into the MPS after 6 April 2006 will not have access to benefits before age 55. The Administration Office will have already notified members to whom this applied that they cannot draw an early pension until age 55, rather than age 50.
In all cases, payment at an earlier age than 50 (or 55, as appropriate) is not possible other than in the exceptional circumstances described on page 18.
Benefits taken before age 60 will be lower than those shown on benefit statements as being payable from age 60 because they will payable earlier, and for longer. This is to ensure that a member’s early retirement is not subsidised by other members.
The level of reduction is reviewed regularly by the Trustees. Currently, benefits payable from age 50 would be 60% of the amount payable at age 60. If taking pension at age 55, 76.4% of the amount payable at age 60 would be payable. Different reduction rates apply to members with a ‘value for money’ enhanced pension, and to current contributors to the IWMPS who are taking both IWMPS and MPS benefits at the same time.
Information for Deferred Members
Lump sums
Members who left after 1 March 1992 are able to take a tax-free cash lump sum of up to 25% of the total value of MPS benefits, subject to a maximum of 25% of the Lifetime Allowance. A 9:1 ‘exchange’ rate is used for calculating the lump sum payable.
Some members who left before 1 March 1992 may have a separate lump sum entitlement which cannot be converted to a pension although an optional higher cash lump sum may be payable. The Lifetime Allowance calculation for a member who left the MPS before 1 March 1992 must include any separate lump sum entitlement before making an estimate as shown on page 11.
The exchange rate is fixed in the Scheme Rules. It in no way represents a fair exchange of annual income for cash when compared with annuity rates offered by insurance companies on the open market.
Although the Scheme offers a lump sum option, a decision to take the maximum lump sum from the Scheme will probably not be in the financial interests of a member in normal health. Taking cash permanently reduces the amount of weekly pension which may be paid for decades to come. Members should bear this in mind before selecting a cash option and may wish to seek independent financial advice.
Trivial commutation
In some instances, very small pensions may be exchanged for a final trivial commutation cash lump sum, provided they pass tests set by HM Revenue and Customs (HMRC). Before December 2009, the only condition was that the pensions from all schemes being converted to cash must be valued at less than 1% of the overall limit on tax-favoured pension funds under the Lifetime Allowance test. Using HMRC’s conversion tables, that means that provided pensions from all schemes come to roughly less than £16 per week in tax year 2009/10, they can be cashed in from age 60 (but before age 75) and converted to a one off lump sum.
From December 2009, a more flexible additional version of trivial commutation was made available by HMRC.
Members whose pension within a single scheme is valued at less than £2,000 by their formula (which is equivalent to an MPS pension of £1.53 per week) may commute it for a single cash payment from age 60.
Under this new test, it does not matter whether such members also have other pension scheme income.
Information for Deferred Members
Transferring out of the MPS
If a member’s MPS benefits are not yet in payment, and subject to certain limits, he can transfer the cash value of his Scheme benefits to:
●another registered pension scheme in the UK, or ●certain overseas schemes
- as long as the managers of such an arrangement are willing and able to accept the transfer.
If a member is thinking about transferring to any other pension arrangement he should consider his options carefully and think about independent financial advice. If a member transfers out of the MPS, he will give up all rights to benefit from the Scheme. The amount available for transfer is called a cash equivalent transfer value (CETV) and will vary depending on a member’s age, gender and current market rates. The CETV payment will be used to provide additional benefits in the receiving arrangement.
For more information, a member can contact the Administration Office about a transfer. They will provide a quotation of the CETV together with details of the Scheme benefits the member would be giving up by transferring. A member can ask for a CETV quotation once a year any time up to one year before his full MPS pension is due to start. In most cases, CETV quotations will be guaranteed for three months. Once this period has expired, the CETV must be re-calculated using up to date factors, and the amount of CETV payable may change.
Death Benefits
It is important that the Administration Office is told of the death of an MPS member as soon as possible. They can then let the family know what details are needed to allow them to identify and pay any benefits due. The benefits payable on death will vary, because they depend on the benefits the member was receiving from the MPS.
Members who left the Scheme on or after 6 April 1978
Widow’s pension
A widow will receive benefits based on two-thirds of the member’s total weekly pension. If at the date of death, the member has been married for less than six months, widow’s benefits would be payable at the discretion of the Trustees. If pension is taken before the member had reached age 60, it is payable at a lower rate, with an early retirement reduction. That early retirement reduction would not apply to the calculation of widow’s pensions.
Once in payment, a widow’s pension is payable for her life and would not cease
If a member is uncertain of the benefits payable in the event of his death, the Administration Office can confirm whether any benefits would be payable to his family.
Most small pensions awarded to those who left the industry before 6 April 1978 carry no continuing entitlement to a widow’s pension.
There are exceptions - a widow’s pension may be payable where a member left the industry at age 65, or was retired on incapacity grounds by British Coal’s Medical Officer. If at the date of death, the member has been married for less than twelve months, widow’s benefits would be payable at the discretion of the Trustees.
If no widow’s pension is payable, any pension benefits due but unpaid at the date of death would be paid to the member’s widow, or next of kin.
A lump sum may be payable on the death of a member who left after 6 April 1975. There is more information on page 16.
Pension benefits payable
Death Benefits
Taking a cash lump sum instead of a pension may not be in the best financial interests of dependants, who may have to live on the income for many years. The Trustees strongly recommend that dependants take financial advice before deciding to take cash from the Scheme instead of pension income.
Leavers before 6 April 1988
There is generally no entitlement to widowers’ pension for the husbands of female Scheme members who left the Scheme before April 1988. The Administration Office will be able to confirm whether a pension is payable.
Leavers on or after 6 April 1988 Where a female Scheme member contributed to the Scheme after April 1988, and died on or after 6 April 1989, benefits are payable to her widower. The benefits payable are calculated in the same way as widow’s benefits.
Other dependants
The Rules give the Trustees some discretion on deciding how to pay particular benefits in certain circumstances. This includes the payment of dependant’s benefits on the death of a Scheme member. These benefits may be payable, depending on the circumstances, where an unmarried couple were living together as partners. The Trustees will take full account of all relevant information provided about a member’s circumstances in making a decision on the payment of discretionary Scheme benefits.
Benefits may also be paid at the Trustees’ discretion, for the duration of the child’s education, to a claimant who had care of the member’s children at the time of his death, or to anyone (except someone already entitled to a child’s pension from the Scheme) who was wholly or mainly maintained by the member. The Trustees can review these discretionary benefits if a dependant’s circumstances change.
Civil Partners
The Civil Partnership Act 2004 came into force on 5 December 2005. Since then, same-sex couples in the UK have been able to enter into a legally recognised relationship which gives a registered civil partner rights and responsibilities similar to those of spouses, including rights to pension scheme benefits. Benefits payable to a qualifying surviving civil partner would be payable on the same basis as the benefits payable to MPS widowers.
Widower’s pension
The widows and widowers of members who contributed to the MPS after 5 April 1978 may also have a Guaranteed Minimum Pension (GMP) entitlement. For widows, this will be half of the member’s GMP. For widowers, the entitlement will be half of the member’s GMP arising from service on or after 6 April 1988. The GMP is a minimum level of pension, which replaces a comparable benefit otherwise payable from the State. There is more information about GMPs on page 7.
From 6 April 2006, changes introduced by HMRC allow increased flexibility in how lump sum death benefits can be taken. Any GMP element can only be paid as a widow or widower’s pension. This is because the GMP is a pension that is paid in place of a State benefit, the State Earnings Related Pension Scheme (SERPS), or the State Second Pension (S2P). If the benefits due from MPS exceed the level of the GMP, the excess can be converted into a cash lump sum, provided the lump sum is below the limit of the unused balance of the deceased member’s Lifetime Allowance. Any lump sum death benefit paid above that level would be taxed at the rate of 55%.
A lump sum death benefit can only be paid if the member is under the age of 75 at the date of death. After a member reaches that age, any benefits due on their later death can only be paid as a pension. There is more information about HMRC’s April 2006 changes on page 11.
Death Benefits
Establishing entitlement to benefit on death - alternative beneficiaries
Where a couple are legally married, it is relatively straightforward to establish entitlement to benefit following the member’s death by asking to see the marriage certificate. This is not possible, of course, where a couple who were unmarried were living together as partners. In such cases, we ask to see supporting evidence of the relationship and of the claimant’s financial dependency on the Scheme member. This could include confirmation of a shared bank account, letters, and utility bills addressed to both parties at the same address. We may also arrange for a visit from a representative of CISWO (the Coal Industry Social Welfare Organisation), as often a claimant may prefer to speak personally to give details of their circumstances.
In the interests of security, many people routinely destroy bank statements and other paperwork. However, anyone living with a partner who would wish to make a claim for dependant’s benefit on the death of the Scheme member should consider whether there would be sufficient information to support their claim.
Children’s allowances
Children under 16, including a child born following a member’s death, a legally adopted child, or a child for whose care and maintenance the member was responsible, may be entitled to receive a pension. Any disabled children, permanently incapable of supporting
themselves, may receive a pension for life. Otherwise, pensions to children cease when they reach age 16 unless they are in full time education in which case payment will continue as long as education continues, up to a maximum age of 21.
It is important that we are notified as soon as education ceases because any overpayment will be repayable to the Scheme.
Children’s pension payments form part of their taxable income. Children’s pensions are normally paid to an adult, usually the surviving parent, for the child’s benefit. They do not form part of the taxable income of the parent as the law currently stands provided the income is the entitlement of the child, and is used for that child’s benefit.
Lump sums on death
If there is no dependant’s pension entitlement following a member’s death, we check to see whether the payments due, or payable, to the member represented the full value of his contributions to the Scheme. If not, any balance, usually a small lump sum, will be paid to the member’s widow, or his estate.
Deferred pensioners
Where a member left after 6 April 1975 and benefits were not in payment at the date of death, the member’s widow or his next of kin would be entitled to a lump sum equal to the
Other Useful Information
Additional Voluntary Contributions
If a member paid Additional Voluntary Contributions (AVCs) in addition to normal MPS contributions, and did not transfer his AVC fund to another arrangement, he will have built up an AVC fund with the Prudential Assurance Company, the company chosen by the Trustees to manage the Scheme’s voluntary contributions arrangement. A member’s AVC fund will provide additional benefits at the time his main MPS benefits become due for payment and can be used to buy an annuity, which provides a pension for life for the member and, if he chooses, for his dependants, or a lump sum.
The AVC has an ‘Open Market Option’, which means that a member can take an additional pension with any provider he chooses at retirement. The Financial Services Authority (FSA) has a website (www.fsa.gov.uk/tables) that allows a comparison of annuity rates available based on the type of annuity a member wishes to take and his AVC fund size. In order that a member can make a comparison, a quotation request form will be sent at the same time as his MPS retirement options. Up to four quotations can be requested from the Prudential.
The quotation request form sent to members who have large AVC funds will include details of an independent annuity broker, Hargreaves Lansdown, who can help to select an annuity from all providers.
Following the tax changes introduced in April 2006, a deferred member can take some (or, in many cases, all) of his AVC fund as a tax-free lump sum, as opposed to having to take it all as pension. As explained elsewhere in this Handbook, there is also an option to take part of the benefit from the main scheme as a lump sum rather than pension.
Information about the AVC policy itself can be obtained from the Prudential’s website:
www.pru.co.uk/retire/pensions/avc/
Members who paid AVCs and who have not yet drawn their benefits receive details of their AVC fund in a separate benefit statement. For any questions about an AVC fund, or the benefits from an AVC fund, please contact the Administration Office at the address on page 27.
Transfers into the Scheme
Following privatisation, transfers into the MPS were no longer accepted.
However, in the 1980s and early 1990s, many members of occupational schemes were advised by personal pension salesmen to transfer their benefits out of the MPS. This advice was later found to be inappropriate for some members. In such cases, the Trustees’ policy was to allow reinstatement, providing the personal pension provider met the full cost. This option was withdrawn from 1 October 2009. Any former MPS member, who believes he may have been badly advised to leave the Scheme, should contact his personal pension provider to determine whether compensation may be payable.
Payee arrangements
If a member who is receiving a Scheme pension becomes unable to manage his pension because of physical or mental incapability, the Committee of Management can appoint a relative or other person to act as payee to receive the pension on his behalf, providing the payee uses the pension payments for the member’s benefit. Further details of these arrangements are available from the Administration Office.
If a member wishes to take a cash lump sum, whatever the total amount that a member wishes to receive as cash (from his AVC fund and from the MPS, taken together), it is likely to be in his interests to take as much of that sum as possible from his AVC fund rather than from the MPS. This is because the rate at which AVC pension is converted to lump sum is currently more favourable than the corresponding rate that currently applies under the terms of the MPS.
Other Useful Information
Discretionary benefits
The benefits provided for MPS membership are set out in the Rules and the Scheme’s Trustees have a duty to pay benefits in accordance with the provisions of those Rules. However, the Trustees may, in certain circumstances, pay discretionary benefits. Where MPS benefits are not yet in payment, the Trustees currently have a discretionary power to grant early payment of unreduced MPS benefits in extreme and exceptional circumstances, whatever a member’s age. For example, discretionary benefits may be claimed where a deferred member provides medical evidence to show that life expectancy is limited to eighteen months or less as a result of terminal illness.
The two remaining methods are:
Divorce
Any member who is involved in divorce proceedings should always consult a solicitor for guidance. The following information provides a general outline of the way in which Scheme benefits might be affected after a divorce. It should be noted that there are differences in the way family law is administered in Scotland to the way it is administered in England and Wales.
When a couple divorce or separate, the court must give full consideration to the value of the pension rights of each spouse or partner. To do this, a calculation of the pension rights of one or both parties will be needed.
On request, the Scheme will provide the member with a valuation for divorce purposes. A valuation can also be provided to a solicitor acting for either party, provided the member’s written authorisation is received. In certain circumstances, the Scheme is entitled to make a charge for this information. There are three ways in which pension rights can be divided when a couple divorce or separate. The first is called ‘offsetting’, in which the pension value is included in the assessment of the value of the couple’s assets - for example, a family home.
Earmarking - part of the member’s pension is set aside for the benefit of the former spouse, to come into payment when the member retires, (or is immediately effective if the member has already retired), or dies. Depending on the terms of the court order, payment of benefits to both parties will cease on the death of the member.
Pension sharing - an alternative option where divorce proceedings were filed after 1 December 2000. The member gives up an agreed share of his pension value, which is used to create a pension in the former spouse’s own name. If the former spouse is of pensionable age then pension income can start straight away and will be paid for life. If she has not reached pensionable age at the date of divorce, then ●
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Please do not delay a claim in such circumstances. Members who need further information about discretionary benefits should contact the Administration Office at the address shown on page 27.
Trustees and Scheme Management
This section explains how the Scheme is run, the duties of the Trustees and the arrangements for management of the Scheme.
The Committee of Management
Trustees of the Mineworkers’ Pension Scheme Limited (TMPSL) is a trustee company, whose ten directors are responsible for managing the Scheme. They form the Scheme’s Committee of Management. (For ease of reference in this Handbook, members of the Committee of Management are usually referred to as “the Trustees”).
Appointment of Trustees
Of the ten members of the Committee, five are appointed, and may be removed, by the Committee. A Nomination Group proposes recommendations to the Committee for these five Trustees, from whom are drawn the Chairman and the Chairmen of the Sub-committees. The appointment of the Scheme Chairman and the Chairman of the Investment Sub-committee require the consent of the Guarantor.
Trustee Elections
The remaining five members of the Committee are Pensioner Representatives elected by Scheme members from five geographical constituencies. All pensioners and deferred pensioners on the Scheme’s electoral register have the right to stand for election and to vote in the constituency where they live. Outgoing Pensioner Representative Trustees who were Union Representatives at October 1994 may also stand for re-election. The period of office for Pensioner Representatives is five years. Each constituency holds an election in turn.
The five constituencies are:
All Trustees are entitled to receive payment for their work as members of the Committee. The rate of remuneration is set by the Guarantor. Their remuneration is reported annually in the Scheme’s Report and Accounts.
Each Trustee has a duty to consider the interests of every member and beneficiary of the Scheme. They have a duty to represent the interests of pensioners and deferred members equally, regardless of whether they were appointed or elected. Elected Trustees are unable to treat members in their constituency in a more favourable way to those in any of the other constituencies.
●Yorkshire and North Lincolnshire;
●Central & Southern England & South Wales; ●North East England & Overseas;
●Scotland, North West England & North Wales; and ●Derbyshire, Nottinghamshire & Lincolnshire
Trustees and Scheme Management
What are the Trustees’ duties and responsibilities?
The Trustees are responsible for the financial management of the Scheme, including investing the Scheme’s funds, and for ensuring that benefits are paid in accordance with the Rules. The Committee of Management is responsible for the overall management of the Scheme; it has regular quarterly meetings and as necessary may meet on other occasions throughout the year.
The Trustees’ duties and powers are defined in the Scheme and Rules and in the general law. In summary, their main duties are:
●to ensure that the MPS is run in accordance with the Scheme and Rules; ●to invest the funds, and to secure payment of Scheme benefits;
●to act in the best interests of all the beneficiaries of the Scheme; and ●to act honestly, prudently and conscientiously.
The Sub-committees
To help perform its duties and to streamline decision making, the Committee has delegated certain of its powers to a number of Sub-committees. Sub-committees are made up of an equal number of elected and appointed Trustees.
The principal Sub-committees are as follows:
The Investment Sub-committee, which oversees the implementation of the Scheme’s investment strategy by its investment managers, monitors the performance of each investment manager and considers investment issues.
The Administration and Benefits Sub-committee, which deals with the administration of the Scheme and benefit issues. Monitoring the performance of the MPS administrator is a key aspect of its duties.
The Discretions and Appeals Sub-committee, which has powers to award certain discretionary benefits. This Sub-committee also considers appeals made at the Second Stage of the Scheme’s Internal Dispute Resolution procedure.
The Risk and Assurance Sub-committee, which oversees the Trustees’ overall risk management framework to ensure that it is efficient and capable of providing an appropriate level of assurance. This Sub-committee also reviews the role, activities, resources, independence and effectiveness of the Scheme’s Internal Audit function, and the scope of the External Auditor’s annual Audit Plan.
Other Trustee Groups:
The Investment Strategy Working Group considers issues relating to the three yearly review of the Scheme’s investment strategy.
Trustees and Scheme Management
The Scheme’s Advisers
The Scheme has appointed a number of specialist investment managers to manage and invest the Scheme’s assets. In addition, professional advice to the Scheme is provided on legal, actuarial, medical and investment matters. All contracts with advisers and service providers are reviewed periodically, and their performance is closely monitored. More details of these appointments are contained in the Scheme’s Report and Accounts.
The Scheme’s Administrators
Pension scheme administration services are provided by a third party administrator selected by the Trustees.
The main point of contact for Scheme pensioners and deferred pensioners is the Scheme’s Administration Office. The Trustees expect the administrators to work to high standards of customer service and their performance is closely monitored. Every year, the Trustees carry out a survey of a sample group of Scheme members to obtain an independent view of how members regard the services provided by the Scheme.
The Government guarantee
The British Coal Corporation, as the principal employer, was until 1994 primarily responsible for funding the Scheme. The Corporation was formally dissolved following the making of a ‘Restructuring Scheme’ under the Coal Industry Act 1994 which provided for the remaining assets and liabilities of British Coal to transfer to the Department of Trade and Industry (DTI).
The Government Guarantee was put in place on 31 October 1994, the day the Scheme was changed to reflect the impact of the privatisation of the coal industry. Certain powers changed with effect from the Closure Date and, at the request of the Committee, the Guarantor amended the Rules to ensure that a small number of important powers and obligations held by British Coal were not lost - in particular, the power to augment benefits. These powers were transferred to the DTI.
In 2007, the DTI was replaced by the Department for Business, Enterprise and Regulatory Reform (BERR). In October 2008, responsibility passed to The Department of Energy and Climate Change (DECC). This change does not affect the Scheme’s Guarantee arrangements in any way.
The Government Guarantee is a legally binding contract between the Trustees and the Government. In addition to ensuring that benefits earned up to privatisation, and benefit improvements from surpluses before 1994, will always be paid and keep their real value, the Guarantee provides protection to ensure that the total pension is not reduced in cash terms each year.
If a future valuation of the Scheme shows there is not enough money in the Guaranteed Fund to pay benefits, funds will be drawn from the Investment Reserve to make up the shortfall. Should the funds in the Investment Reserve be insufficient to achieve this, the funds in the Guarantor’s Fund and the Bonus Augmentation Fund would be used to make good the remaining shortfall.
If this happens, the ‘standstill’ arrangement ensures that combined pension payments from the Guaranteed Fund and the Bonus Augmentation Fund do not decrease (although the total may stand still for a period). If the combined assets of the Guarantor’s Fund and the Bonus Augmentation Fund are not enough to achieve this, the Government will have to put new money into the Scheme to fund the Guarantee.
Trustees and Scheme Management
The guarantee arrangements provide:
If there is a deficit, as there was in 2003 and 2009, payment of any remaining sums to the Guarantor is reviewed and, if appropriate, revised.
The Sub-funds
All of the assets of the Scheme are invested together in one fund and the same investment policy is applied to all of the assets. However, for accounting purposes, the Scheme is split into a number of sub-funds. There are four principal sub-funds, one of which is the Investment Reserve, which holds the unused balance of British Coal’s share of surpluses from the final valuation before privatisation. The other three sub-funds are explained below. The Guaranteed Fund contains the assets necessary to pay all of the guaranteed liabilities, which are the benefits due to members from their employment in the industry and the annual RPI increase on these benefits.
The Bonus Augmentation Fund receives 50% of any surplus declared after 1994 and is used to pay bonuses, to current and future pensioners.
The Guarantor’s Fund receives the Guarantor’s 50% share of the surpluses declared after 1994, which is gradually released to Government as a stream of annual payments.
Valuations, Bonuses and other benefit improvements
The purpose of the valuation is for the Scheme’s Actuary to assess whether the long term value of the assets held is sufficient to meet the liabilities.
The liabilities are the Actuary’s current estimate of the total cost of paying pensions and other benefits for the remaining life of the Scheme.
The valuation result is based on a series of assumptions about the likely long term rates on various classes of investments, on economic factors like the rate of inflation and on assumptions about the life expectancy of the members of the Scheme and their dependants.
that 50% of any surplus after 1994 is made available to provide Bonuses for Scheme members. The remaining 50% is payable, in equal instalments over 10 years, to the Guarantor;
an unconditional guarantee that the level of pensions in payment will never be less than the level earned up to 1994 indexed in line with the RPI since then regardless of whether the Scheme has sufficient funding itself to meet the cost; and
an unconditional guarantee that the total amount of a member’s pension in payment will not be reduced in cash terms, even if there is insufficient money in the Scheme.
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Trustees and Scheme Management
Benefit improvements awarded before privatisation
1987 valuation - changes effective 1 April 1990
Pensionable Age reduced to 62 for men
Pension builds up at 80ths, backdated to April 1975 for members in service at 1 April 1990
Additional 5% pensions increase Improved increases on deferred pensions
Early payment of pension available to current contributors from age 59
1990 valuation - changes effective 1 March 1992
Pensionable Age reduced to 60 Increased death in service lump sums
Pension builds up at 60ths, backdated to April 1975 for members in service at 1 March 1992
25% service credit for current contributors
Additional 8% pensions increase, effective from 28 September 1992 Deferred pensions payable from age 60
Early payment of pension available to current contributors at any age from 55 Levelling option made available to current contributors on retirement
Lump sum of 156 times the weekly pension payable on the death of a deferred member who left the MPS after 6 April 1975
1993 valuation - changes effective 4 July 1994
7.13% service credit for contributors
Trustees and Scheme Management
2002 valuation - changes effective 22 September 2003
The 2002 valuation revealed a deficit in the Guaranteed Fund and that there was not enough money to pay guaranteed benefits. In autumn 2003, the Trustees called on the Standstill guarantee to maintain guaranteed pension levels and £390 million was transferred from one of the four Sub-funds, the Government’s Investment Reserve.
The Bonus Augmentation Fund (the fund from which bonuses are paid) was also found to be in deficit. As a result, previously awarded bonuses were converted from level bonuses to reducing bonuses. This conversion reduced their value, requiring a further valuation of the Bonus Augmentation Fund to be undertaken. This second valuation showed a small residual surplus, which enabled the Trustees to award a special bonus, allowing increases to be paid in 2003, 2004 and 2005.
2005 valuation - changes effective 18 September 2006
The 2005 valuation showed that the Fund had returned to surplus. After repaying the money transferred from the Investment Reserve, part of the remaining money was used, from September 2006, to maintain the annual inflation linked increases for a further three years, from 2006 to 2008.
In addition, sufficient funds remained to provide a further new bonus. Scheme members receiving their pension on or before 18 September 2006 received a 6% bonus on the Guaranteed Pension level immediately prior to the 2006 cost of living increase. Scheme members under 60 whose MPS pension was not in payment by 18 September 2006 received a 10% bonus on Guaranteed Benefits, deferred until their retirement.
2008 valuation
The 2008 valuation revealed a deficit in the Fund. In autumn 2009, the Trustees called on the Standstill guarantee to maintain pension levels. The Trustees were able to maintain pension levels in 2009 by borrowing £1,044 million from the Government’s Investment Reserve.
As the rate of RPI increase was negative, no increase was applied to benefits in 2009. The guarantee arrangements mean that pensions cannot reduce; accordingly, there was no reduction in 2009 to reflect the negative change to RPI. As a consequence of the fall of
Bonuses awarded after privatisation
1996 valuation - changes effective 2 June 1997
The 1996 valuation showed that the Fund was in surplus, allowing the Trustees to pay a 20% Bonus for all pensioners and deferred pensioners.
1999 valuation - changes effective 3 July 2000
The 1999 valuation showed that the Fund was again in surplus. In addition to paying a 9% bonus for pensioners and deferred pensioners, Trustees were able to add an 8.1% index-linking increase to the 20% Bonus awarded in 1997 to pensioners and deferred pensioners.
Retirement Income
General Notes about the Scheme and Retirement Income
In most instances, retirement income will come from more than one source. Most Scheme members are entitled to a State Pension as well as a Scheme pension and may have income from other pension arrangements.
The State Pension Scheme
There are two parts to the State Pension currently payable from State Pension Age:
Contracting-out
The Scheme “contracted-out” of SERPS on 6 April 1978 and Scheme Members paid the lower contracted-out rate of National Insurance Contributions whilst they were contributing members of the Scheme. The Scheme therefore ensures that a member’s pension is not less than the Guaranteed Minimum Pension (broadly equivalent to the benefit which would have been payable from SERPS) for contributing members from 6 April 1978, and meets the requirements of the Pension Schemes Act 1993 in this respect. Member may find that they have some residual SERPS pension payable by the State but it will be smaller than for those who remained contracted-in.
The Second State Pension (S2P)
From April 2002, SERPS was replaced by the Second State Pension (S2P). As the MPS has not accepted payment of ongoing contributions since the industry was privatised, at the end of 1994, this has no effect on MPS members. However, MPS members who are still working in other employment may be accruing benefits under the S2P arrangements, or may be contracted out of S2P.
Income Related State and Council benefits
Scheme benefits and any increases may be taken into account by the Benefits Agencies and local councils in working out an individual’s entitlement to Income Support, Council Tax rebates and Housing Benefit. There is no action the Trustees can take to prevent the Benefits Agencies and local authorities from applying their rules.
Assignment of benefits/Court Orders
A member may not assign his Scheme benefits to another person or use them as security for a loan. The Courts and certain Government agencies can make orders against the Scheme to make a deduction of pension to settle a debt. These include Attachment of Earnings Orders and Orders to make payments to a former spouse as part of a divorce
Basic Pension
The basic pension is a flat rate amount paid to everyone from State Pension Age who has paid sufficient National Insurance Contributions.
State Earnings-Related Pension Scheme
SERPS (the State Earnings Related Pension Scheme), also known as the Additional State Pension, ran from 6 April 1978 to 5 April 2002 when the State Second Pension was introduced. SERPS pays an additional earnings related State pension to people who paid full National Insurance Contributions between 1978 and 2002. For members of contracted-out schemes like the Mineworkers’ Pension Scheme, who paid lower rate National Insurance Contributions, their contracted-out scheme provides the earnings related element, although they may have a small residual SERPS benefit.
Guaranteed Minimum Pension
From age 65 (for men) and 60 (for women), the Scheme is required to pay a minimum level of pension for MPS members who contributed to the Scheme after April 1978. This minimum level is called the Guaranteed Minimum Pension (GMP) and it replaces an equivalent benefit which, had an MPS member not been contracted out, would have been payable by the State. The GMP is not an additional pension. It is simply a minimum which the Scheme pension must not fall below.
Some married female members, who chose to pay reduced National Insurance Contributions, do not qualify for the additional component from the State and so are not entitled to a GMP from the Scheme.
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Scheme Publications
The Scheme provides a range of publications for members, which are available from the Administration Office. Some of these can also be downloaded from the Scheme’s website.
Pensions Newsline
The Trustees send this regular newsletter to Scheme members. Any member who does not receive copies, or would like any recent back copy, should contact the Administration Office.
Actuarial Valuation Review and Report
The Scheme’s Actuary carries out a review or valuation of the Scheme usually every three years. Scheme members can ask for a copy of the latest valuation report.
Annual Report and Accounts
The Trustees produce an annual Report and Accounts which includes a report from the Committee of Management and a financial review of the year. A summary of the Report and Accounts is always included in the spring edition of Newsline, but any Scheme member can ask for a copy of the full Report and Accounts.
Statement of Investment Principles
The Scheme is exempt from producing a Statement of Investment Principles (SIP) under the Occupational Pension Schemes (Investment) Regulations 2005. However, under Clause 9A of the Scheme and Rules the Trustee is required to prepare and maintain a written statement of the principles governing decisions about investments for the purposes of the Scheme. The Statement is reviewed annually and immediately after any significant change in investment policy.
The statement covers a range of issues including the Trustee’s policy in choosing investments, the type and proportion of investments held, the expected return on investments, and disinvestment.
Data Protection
It is necessary for the Trustees to hold and process personal data about members. This data will be used by the Trustees and their advisers and service providers, to calculate and pay benefits, to communicate with members, for statistical and reference purposes and to administer the Scheme. This information and its use have been registered under the Data
Useful Contacts
Pension Queries
The Administration Office will be able to help with information about Scheme benefits. Write to:
Mineworkers’ Pension Scheme
Sutherland House, Russell Way, Crawley RH10 1UH or telephone them on the Lo-call number 0845 606 4444
The Trustees take their responsibilities under the Data Protection Act very seriously and a member who contacts the Administration Office will be required to answer some security questions before any information can be provided.
Questions about tax
If a member’s total retirement income is greater than his personal income tax allowance, then his Scheme pension will be subject to income tax in the same way as earnings. Staff at the Administration Office may be able to help with some enquiries about any tax deducted from Scheme pensions. However, HM Revenue and Customs (HMRC) is usually best placed to answer questions about liability for tax and how this is assessed in detail. For any detailed questions about tax, write to:
HMRC, Bootle Maritime, The Triad, Stanley Road, Bootle L75 2TT or telephone them on 0845 300 3939
In order to answer an enquiry, HMRC will ask for the member’s National Insurance number and the reference 083/MPS.
For more information about the Scheme
More information about the MPS, including copies of Scheme Newsletters, factsheets, and a regularly updated Scheme News section, can be found on the Scheme’s website:
www.mps-pension.org.uk
During 2010, the website will be revised to contain information provided in this Handbook.
Coal Industry Social Welfare Organisation (CISWO)
CISWO was established as an independent national charity upon privatisation of the coal industry for the delivery of Community & Personal Welfare Services to those who work or have worked in the industry, and their families.
Useful Contacts
Problems and complaints
The Trustees aim to ensure that the Scheme is administered and managed to high standards. Please contact the Administration Office first with any query or problem about the MPS.
Where this does not resolve the matter, a formal complaint can be made through the Scheme’s own Internal Dispute Resolution (IDR) procedure. The Scheme’s IDR Procedure complies with the requirements of Section 50 of the Pensions Act 1995.
Who can use the IDR procedure?
The IDR Procedure can be used by any MPS member, pensioner or deferred pensioner. It is also available to the widow, widower, civil partner, child or other dependant of a member who has died, to a pension credit member, and to a prospective beneficiary. Anyone who used to be in these groups may also still use the procedure, but should apply within 6 months of leaving or ceasing to be in the group.
How does the IDR procedure work?
A formal complaint should be made in writing to the Benefits Manager, Coal Pension Trustees Services Limited, Hussar Court, Hillsborough Barracks, Sheffield S6 2GZ. The first stage involves the Benefits Manager considering the complaint on the Trustees’ behalf. A decision on the complaint will normally be provided within two weeks, although complex matters may take a little longer. We aim to provide a decision within four months. If this is not possible, we will provide an interim reply giving reasons for any delay and an expected date for the decision.
How to take a complaint further
Where the Benefits Manager’s decision does not resolve the matter, the Trustees can be asked to consider the complaint. This is the second stage of the Dispute Resolution procedure. The Trustees will usually be able to give their decision within two months of an appeal. They may confirm the decision of the Benefits Manager or they may take a different view. In any case where the Trustees cannot give their decision within four months they will write, setting out reasons for the delay and an expected date for giving their decision.
If a complainant is not satisfied with the Trustees’ decision, or would like any independent help at any stage, The Pensions Advisory Service (TPAS) can be contacted for help and advice. If TPAS is unable to resolve the complaint, the Pensions Ombudsman may be prepared to assist.
Useful Contacts
The Pensions Advisory Service
The Pensions Advisory Service (TPAS) can help with any complaint about the Scheme which cannot be resolved with the Administration Office or the Trustees.
TPAS is an independent voluntary organisation with locally based advisers who provide help and advice on pensions matters in confidence and free of charge. TPAS can be contacted at:
11 Belgrave Road, London SW1V 1RB. Telephone: 0845 601 2923
Email: [email protected] TPAS’ website is: www.pensionsadvisoryservice.org.uk
The Pensions Ombudsman
The Pensions Ombudsman, appointed by the Government, may investigate and decide any complaint or dispute of fact or law in relation to the Scheme made or referred to him in accordance with the Pension Schemes Act 1993.
Although they are separate organisations, the Pensions Ombudsman is at the same address as TPAS:
11 Belgrave Road, London SW1V 1RB.
The Registrar of Pension Schemes
The Scheme has provided the Registrar of Pension Schemes with details about the Scheme and a contact name and address. The Registrar holds a list of the up to date addresses of pension schemes to help former scheme members trace their pension rights.
The Pensions Tracing Service
Tyneview Park, Whitley Road, Newcastle upon Tyne, NE98 1BA
The Pension Service can be contacted on 0845 6002 537 to trace a pension scheme over the phone, or request an application form. The website is: www.direct.gov.uk
The Pensions Regulator
The Pensions Regulator was established to protect the benefits of members of work-based pension schemes, to promote good administration of work-based pension schemes, and to reduce the risk of situations arising that may lead to claims for compensation from the Pension Protection Fund. With its separate Government Guarantee, the MPS is not eligible to join the Pension Protection Fund.
The Pensions Regulator issues codes of practice and guidance on how to comply with pensions legislation.
The Regulator is able to intervene in the running of schemes where trustees, employers or professional advisers have failed in their duties.
The address at which the Regulator may be contacted is:
The Pensions Regulator
Napier House, Trafalgar Place, Brighton, BN1 4DW The website is: www.thepensionsregulator.gov.uk
Glossary
A number of special terms are used in this Handbook. They are necessary to enable the benefits provided by the Scheme to be described accurately. The following terms are used throughout this Handbook and the meanings given below should be referred to wherever necessary.
Accrual Rate
The rate at which pension earned after 6 April 1975 built up. The Accrual Rate used in the benefit calculation depends on the date a member left the Scheme.
Actuarial Valuation
An investigation by an actuary into the ability of a pension scheme to meet its liabilities. This is usually to assess the funding level and a recommended contribution rate based on comparing the actuarial value of assets and the actuarial liability.
Actuary
An adviser who calculates the value of the Scheme’s total pension liabilities by analysing current membership, the economic outlook and long-term demographic trends to determine whether the Scheme is in surplus or deficit. The Actuary for the MPS is the Government Actuary.
Additional Voluntary Contributions
Contributions over and above a member’s normal contributions, which the member elects to pay to the scheme in order to secure additional benefits.
Bonus Augmentations
Benefit improvements from valuation surpluses arising from valuations undertaken after October 1994. Bonus Augmentations are not fully guaranteed by the Government.
Bonus Augmentation Fund
The sub-fund which holds members’ 50% share of surpluses.
Child
Includes a posthumous child, stepchild, a child whom he has legally adopted and a child for whose care and maintenance the member was, in the opinion of the Trustees, responsible at the relevant date.
Committee of Management
