UK Coal has succumbed to a radical overhaul of its business that will save 2,000 jobs but will cut miners' pensions.
The group, which can trace its roots to the former British Coal, entered administration yesterday in a move that will see its £543m pension liability transferred to the Pension Protection Fund (PPF).
UK Coal has been suffering financial problems for months, and was restructured following a fire at its Daw Mill mine in Warwickshire last year. The group operates two deep mines and six surface mines under the banner of UK Coal Operations.
About 350 jobs will be lost at Daw Mill, with some 120 of these workers transferring to other mines.
Administrators at PricewaterhouseCoopers will transfer the company's mines to a new holding company, UK Coal Mining Holdings Ltd, which will then be owned by an employee trust and make payments to the PPF.
In terms of retirement savings, about 7,000 pension scheme members will be affected, with 1,000 in final salary schemes losing 10 per cent of the value of their pensions.
The PPF is funded by a levy on businesses with final-salary pension schemes. It said it had £20bn of assets and was able to absorb the UK Coal scheme.
Martin Clarke, the director of risk at the Pension Protection Fund, said: "It became clear to everyone involved very quickly that, whatever the future held for UK Coal, its pension scheme would come into the PPF because of the size of its deficit. By taking on the scheme, we will now protect the pensions of its 7,000 members and provide them security in retirement."Reuse content