Mineworkers Pension Scheme 2026: Labour Considers £1bn Extra Payment and Surplus Rule Change

NEWS | PENSIONS

Background: the 1994 privatisation deal

The Mineworkers' Pension Scheme (MPS) was established following the privatisation of British Coal in December 1994. As part of that settlement, the government agreed to guarantee miners' pensions against any shortfall in the scheme's funding. In exchange, the Treasury took a 50% share of any future investment surpluses generated by the MPS.

That arrangement has been a source of long-running dispute. Campaign groups representing former miners argue that decades of surplus-sharing have resulted in the government extracting billions of pounds from a fund built on the labour of mining communities, while miners received only half the benefit of good investment performance.

The triennial valuation process - conducted every three years - determines the scheme's funding position and triggers surplus distributions when the fund is in credit. The most recent surplus distribution was approximately £1.1 billion at the September 2023 valuation, shared equally between members and the government. The next triennial valuation is due on 30 September 2026.

What Labour has already done

Since taking office in 2024, the Labour government has already transferred £3.8 billion to the former British Coal pension schemes. The first major action was a £1.5 billion transfer to the MPS supporting more than 100,000 members, which resulted in an average pension increase of approximately £29 per week. A separate payment was made to the British Coal Staff Superannuation Scheme (BCSSS) in December 2025, covering approximately 40,000 former colliery staff including engineers, managers and administrators.

The BCSSS payment was backdated to November 2024 and was described by the government as completing the pension uplift for all members of the former British Coal schemes. Members received an average lump sum payment of approximately £5,500 as a result of the backdating.

What is now being considered

Reports published on 23 June 2026 indicate that the government is considering a further £1 billion transfer to MPS members, alongside a structural change to the surplus-sharing arrangement that would give members up to 100% of future surpluses rather than the current 50% split.

Such a change would effectively re-open and renegotiate the core financial terms of the 1994 privatisation settlement. If implemented, the government would no longer receive any share of investment gains generated by the scheme in future valuation cycles.

Andy Burnham, widely reported to be the frontrunner to become the next Labour leader following Sir Keir Starmer's resignation, has stated publicly that he intends to continue fighting for mineworkers' pension rights. The policy has strong support from mining communities concentrated in Wales, Yorkshire, the North East of England, the East Midlands and Scotland.

The campaign argument

Campaign groups representing MPS members argue that the 1994 deal was structured to protect taxpayers against the risk of the privatised mines failing and leaving pension liabilities unfunded. The government bore the downside risk; taking a share of the upside surplus was presented as fair compensation for that guarantee.

Critics of the surplus-sharing arrangement contend that the scheme has in fact performed well, meaning the government has collected large surplus payments that campaigners argue should have gone to miners who spent careers in physically demanding and dangerous employment. Spokespeople for the campaign have described continued surplus-sharing as miners "living hand-to-mouth, knowing there's money there that should be given to us."

Supporters of maintaining some government stake argue that the guarantee arrangement was the precondition for securing the fund's safety and that retrospectively removing it creates precedent for reopening other privatisation-era settlements.

What happens next

No formal announcement of the additional £1 billion payment or the surplus-sharing rule change has been made at the time of publication. The next key date is the September 2026 triennial valuation, which will determine the current funding position of the MPS and trigger the next scheduled surplus calculation. Any legislative changes to the surplus-sharing arrangement would require secondary legislation.

Frequently asked questions

Who is in the Mineworkers' Pension Scheme?

The MPS covers former employees of British Coal who were active members of the scheme before privatisation in December 1994. The scheme closed to new members at privatisation. Current pensioners and deferred members (those who left employment before retirement) are covered. A separate scheme - the British Coal Staff Superannuation Scheme (BCSSS) - covers staff employees rather than production workers.

How can I check my MPS pension?

Active members can access their pension details through the MPS Member Pension Website at mps-pension.org.uk. Pensioners should contact Coal Pension Trustees Services directly if they have queries about payment amounts or backdating.

Does the 1994 deal apply in Scotland and Wales?

Yes. The MPS covers former British Coal employees across all parts of the UK where mining took place, including South Wales, Yorkshire, the North East, the East Midlands, the Scottish coalfields and other regions. The surplus-sharing arrangement applies at the level of the national scheme rather than on a regional basis.

What is the British Coal Staff Superannuation Scheme?

The BCSSS is the pension scheme for non-mining staff who worked at British Coal collieries before privatisation. It covers engineers, managers, administrators and other staff roles. It operates under similar arrangements to the MPS with regard to government guarantee and surplus-sharing, and was included in the December 2025 pension uplift payment.