A row between the trustees and British Coal erupted after the company revealed that it was planning to withhold payment of pounds 109m owed to the pension fund and pay it from its pounds 400m share of the surplus remaining after liabilities to pensioners, dependants and contributors are provided for.
Yesterday, British Coal was formally threatened with legal action by the trustees unless it withdraws proposals to raid the pension fund's surplus, in a way that the company admitted was suggested by the Department of Trade and Industry.
But, privately, trustees are also worried that actuarial estimates of a healthy surplus now could decrease, depending on market conditions, over the coming years. The estimate of how big the surplus is now already varies between pounds 960m and pounds 1.4bn, depending on differing assumptions made by the Government actuary and the fund's investment managers.
The fund's administrators admit that what looks like a surplus could easily turn to deficit as it has done in the past. In the 1970s and early 1980s a deficit of about pounds 350m built up, but this was made up by the company.
In a statement, the eight trustees who form the committee of management of the staff super annuation scheme, said they very much regretted the successful performance of the scheme had become 'a matter for litigation rather than celebration'.
British Coal is trying to withhold a pounds 109m instalment owed to an earlier redundancy package. A total of pounds 481m is outstanding and since the Government reimburses most of the money, if British Coal withholds payment, the Government will save pounds 481m. This could help to pay the promised pounds 500m subsidy which won support for Michael Heseltine's pit closures.
The trustees say they have been advised that it is contrary to the fund's rules to use the surplus in this way. In the past British Coal has taken a contributions holiday instead.
The scheme's assets are estimated to be worth just over pounds 7bn. Bryn Davies, a member of the Institute of Actuaries, who advises on union pension funds (though not British Coal's), said: 'These figures aren't anywhere near as reliable as people have come to assume.'
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