Early payment of benefits on redundancy

Arrangements made by British Coal provide for benefits to be paid early to certain members made redundant by British Coal or by successor employers. The arrangements in respect of such members who were transferred to new employment as a consequence of privatisation are that benefits will be paid early to those members:

• who were BCSSS contributors at the date of transfer to the successor employer
• who are made redundant by their successor employer (providing continuity with previous British Coal employment is maintained)
• who meet the relevant qualifying conditions for early payment.

Members made redundant who meet the qualifying conditions will be entitled to payment of benefits on reaching age 50 or the immediate payment of benefits if 50 or over at the date of redundancy. These provisions are not contained in the Rules of the Scheme. They were made by British Coal exercising a discretionary power which British Coal held under Rule 50 of the Scheme.

Those affected will have been notified about the arrangements.

Linking arrangements for members taking benefits from the IWCSSS

If you are a contributor to the IWCSSS and you become entitled to an ill health retirement pension from the IWCSSS, this will trigger the payment of your deferred BCSSS benefits if you were a contributor to the BCSSS after October 1994.

Payment will start from the same date that your IWCSSS benefits are paid.

Arrangements if you have already taken a reduced early pension from the BCSSS

Members who take reduced early pension under the option described earlier may subsequently become entitled to the payment of unreduced benefits as a consequence of redundancy or ill health retirement from the IWCSSS. If this happens, the pension in payment will be increased to the full amount of pension due as a result of redundancy or ill health calculated at the date of redundancy or the date the IWCSSS pension starts. Because of Inland Revenue rules, it is not possible to take a lump sum payment at the date pension is increased to the unreduced level. Members who took a reduced lump sum when their BCSSS pension started will therefore not be able to take a further lump sum payment. Instead there will be a compensating increase to pension, subject to benefits not exceeding Inland Revenue Limits. The Scheme’s administration office will explain how the increase is calculated.

Benefits for members who paid Additional Voluntary Contributions

If you paid Additional Voluntary Contributions (AVCs), additional benefits will be payable from your AVC fund with the Prudential. Your fund will continue to be invested by the Prudential. You will be sent an annual statement showing the value of your AVC fund.

When your BCSSS pension starts, the proceeds of your AVC fund will be available to buy an annuity providing an additional pension for life. The annuity can be purchased from the Prudential or, if you prefer, from another provider who may offer better rates at the time.

You will have a range of options when you come to buy the annuity. For instance, the additional pension could include a pension for your spouse after your death and a provision for annual increases. If you take this type of option this will be in return for a smaller initial additional pension.

If you were to die before retirement the proceeds of your AVC fund would be available as a lump sum for the benefit of your estate or dependants.

If at retirement, the proceeds of your AVC investment together with your BCSSS benefits exceed Inland Revenue Limits, you will receive a refund of your surplus AVC fund less a tax charge.