The Pensions Regulator (TPR) has today fully outlined its actions that enabled the restructuring of the UK Coal Group thus ensuring an improved outlook for the business.

During 2012, the board of UK Coal had concluded that the group’s operating structure and balance sheet were not appropriate for the level of operating risk in the business. Initial proposals by UK Coal to the regulator involved the liabilities of the UK Coal sections (the Industry Wide Coal-Staff Superannuation Scheme, IWCSSS, and the Industry-Wide Mineworkers Pension Scheme, IWMPS) being partially or wholly transferred to the Pension Protection Fund (PPF) via a regulated apportionment arrangement (RAA).

According to recent figures, the UK Coal sections had an estimated aggregate deficit on a buy-out basis of £900m on aggregate assets of £451m.

The regulator encouraged the parties involved to explore other funding solutions. Following extensive discussions, a plan was agreed which has resulted in substantially all of the economic interest in the group transferring from shareholders to the trustees of the UK Coal sections. With the company being split into mining and property divisions it is hoped that its mining division can achieve another ten years of production.

TPR executive director for DB regulation Stephen Soper said: “The restructuring has improved the outlook for the business and will enable continued support to be provided to the UK Coal sections from an ongoing sponsoring employer. This provides the best available opportunity to maximise the value provided by the group to the UK Coal sections and therefore improves the chances of benefits being paid to members.”

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