Scheme Publications and Factsheets

Have any changes been made to the Scheme Rules since 1994 to improve member outcomes?

Since privatisation in 1994 the Trustees have consistently sought to improve member outcomes, both while exercising their fiduciary responsibilities within the Scheme Rules and by seeking rule changes which would benefit members, though the latter has only been possible with the Government’s agreement.

Working within the Scheme Rules:

The Trustees have invested the assets in a way that has generally been successful in generating excellent returns which has resulted in surpluses at some of the actuarial valuations. These surpluses have allowed the Trustees to award extra bonus pensions to members via their 50% share of surpluses.
At the 2002, 2008 and 2011 valuations when the Scheme was in deficit, the Trustees were able to borrow from the Investment Reserve so that members’ pensions have never ‘stood still’ and have therefore almost always increased from one year to the next.

Seeking the Government’s agreement to change the Scheme Rules:

In 2013 the Trustees and Government agreed to extend the ‘life’ of the Investment Reserve, which had been due to end in 2019, so that it could continue to play a valuable role in helping to avoid pensions ‘standing still’ in the event of a future deficit.
At the 2017 valuation, the Trustees negotiated a six-year ‘deal’ which meant that the total pension could be expected to increase by at least 4.2% of guaranteed pension in each year from and including 2018 to 2023.
More recently the Trustees succeeded in protecting bonuses so that all bonus pensions built up to 2023 will also be covered by the Government Guarantee, so that they can’t be lost.

The headline outcome for members of all the above initiatives is the fact that bonus pensions have been consistently paid since 1994, with the typical weekly pension currently around a third higher than it would have been had no bonus pensions been awarded (based on pensions in payment as 30 September 2020).

The Trustees have also asked the Government to reconsider the terms of the surplus sharing arrangements on a number of occasions since 1994. On each occasion the Government has declined the Trustees’ request.

What were the main recommendations made by the Business Energy and Industrial Strategy Committee (“the BEIS Committee”) following its inquiry into the Scheme in March and April 2021?

In its report the BEIS Committee recommended that the Investment Reserve should be used to provide an immediate cash uplift to pensions and that all future surpluses should be distributed to members by default, with the Government only receiving surplus monies in future if the Scheme has previously fallen into deficit and the Government has had to provide funds.

These changes would improve members’ pensions, by allowing the Trustees to provide an immediate increase in pensions and by enabling the Trustees to declare bigger bonus pensions in the event of future surpluses. Naturally the Trustees are supportive of such changes.

However, the Trustees do not have the power to implement these changes without the agreement of the Government and, to date, the Government have rejected all of the BEIS Committee’s recommendations.

Is the Government bound to implement the recommendations from the BEIS Committees Report?

No, the Government is not bound to implement any of the recommendations outlined in the Report.

Will the Trustees continue to seek changes to the Scheme Rules that will improve member outcomes?

The Trustees continue to seek opportunities to improve outcomes for members. This includes engaging with the Government and the Trustees would of course be supportive of changes to the Scheme arrangements that would improve members’ pension outcomes.

Scheme Publications and Factsheets