Issues agreed in row over coal pensions: High Court to rule on payment scheme

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THE High Court will rule, within the next month, on the legality of British Coal's attempts to pay hundreds of millions of pounds owed to its staff pension scheme from its share of the fund's surplus.

The scheme's management committee and British Coal yesterday agreed the issues to be put before the court in an effort to resolve their row over the outstanding pounds 481m, of which pounds 109m should have been paid on 5 April.

Trustees of the scheme had formally threatened to sue British Coal after it withheld the last instalment. Legal advice they received stated that the move contravened the deeds of the trust and that it was their duty to vigorously safeguard pensioners' interests.

Ironically, it is now the pension scheme which is being sued by British Coal, but this is a technicality so that the dispute can be brought before the court to obtain the ruling.

The payment of pounds 109m is one of the annual instalments agreed in 1983, to be paid by the company as enhanced pensions for redundant staff, as part of an ongoing redundancy package. A total of pounds pounds 481m is outstanding. The row erupted when British Coal said that, in line with its legal advice, it intended to make the payment from its share of the fund's surplus once liabilities to pensioners, dependants and contributors are provided for. Estimates put the surplus of the fund at anything between pounds 960m and pounds 1.4bn, depending on the differing assumptions of the Government's actuaries and the fund's investment managers.

British Coal intended to use its share of that surplus, about half, to pay the pounds 481m. The move led to accusations that since the Government would have had to pay most of pounds 481m, it was merely a round-about way to clawback the pounds 500m subsidy Michael Heseltine, Secretary of State for Trade and Industry, had pledged for the industry to help stave off pit closures.

Yesterday a spokesman for British Coal said the deal had been reached in an effort to resolve the dispute as quickly as possible and 'end the uncertainties of retired and present. . .employees'.