UK COAL’S pension scheme will be taken over by the state rescue fund following yesterday’s move to put part of the struggling miner into administration.
The Pension Protection Fund (PPF) will secure nearly 7,000 pensions under the deal, which administrator PwC said will save 2,000 jobs at the firm’s remaining mines.
The pension scheme has deficits of around £543m, according to The Pensions Regulator’s most recent estimates, but the PPF said its £20bn asset base could comfortably absorb the liabilities.
UK Coal has struggled to recover from a massive fire at the Daw Mill colliery in February, after starting a restructuring plan in December 2012. Daw Mill will be handed to the state-run Coal Authority and is set to close.
The administration of UK Coal Operations yesterday means the firm’s two pits and six surface mines move into a new company, UK Coal Production, and will be operated as an employee trust making payments into the pension pot.
The PPF will have an interest in the new firm through secured loans.
UK Coal chief executive Kevin McCullough said the arrangement cost 350 jobs at Daw Mill but means “this country can still produce coal on a reasonable scale”.
“Today is very much a day of mixed emotions, but this is the best outcome that it was possible to achieve,” he said in a statement.
Last year, the firm produced more than a third of Britain’s domestic coal supply and four per cent of its electricity.
Coalfield Resources, the London-listed unit that split from UK Coal in December and took on the group’s restructuring fees and property, said it will now focus solely on the real estate portfolio, severing its ties with mining.