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:

Basic Pension

The basic pension is a flat rate amount paid from State Pension Age to everyone 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

Before April 2010, State Pensionable Age was 65 for men and 60 for women. From April 2010, State Pensionable Age for women will gradually increase so that by 2020, State Pensionable Age will have been equalised for men and women, at age 65.

From State Pensionable age, 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.

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. Members 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 settlement. Where the Scheme is obliged by law, we will comply with an order.