Pension deal with UK Coal criticised

Pension deal with UK Coal criticised
Published:  15 Jul at 9 AM
The government has been criticised for a recent deal to rescue the pension funds of UK Coal. The Pension Protection Fund is no longer seeking insolvency and has agreed to take on most of the group’s economic interests held through debt instruments.

Outspoken pensions critic and former corporate treasurer at Boots, John Ralfe, accused the government of attempting to renationalise the coal industry. He has called on the Coalition and the PPF to explain in detail how the deal is expected to work. The UK Coal pension funds are currently £540 million in the red.

An employee benefits trust has been established to look after UK Coal’s equity. Any profits made will be handed to the PPF so that the pension deficit can be reduced. However, there are other creditors reportedly owed between £200 and £300 million and it is not yet clear how much they will eventually receive.

Mt Ralfe wants Alan Rubenstein, head of the PPF, to explain what the latest deal means and whether it was the result of political pressure. He added that businesses in the UK were also due an explanation as the PPF is funded by the pension scheme levy.

The PPF’s financial risk executive director said last week that it was not unusual to consider restructuring rather than insolvency in cases such as this.