Legal moves on pit pensions

BRITISH COAL is almost certain to be taken to court over allegations that the company is trying to withhold illegally pounds 480m from the staff pension fund.

Trustees of the pounds 6.5bn fund are furious after it was revealed that British Coal (BC) intends to stop paying into a special fund for redundant workers. They claim BC is reneging on earlier promises, and fear the move will lead to raids on the pension fund in the run up to privatisation.

The Department of Trade and Industry has been accused by some trustees of forcing the coal board into the move. BC sources privately admit it was 'nudged' by the DTI.

BC and the DTI, however, argue that the changes in the funding are legal and will save taxpayers millions of pounds every year. A final decision on court action will be made at the end of the week, although both sides said yesterday they had the law on their side.

The dispute has been caused by a pounds 1bn surplus in the pension fund, of which BC are entitled to a pounds 470m rebate. It wants to use the money to offset payments into a staff scheme designed to pay redundancy pay and early pensions to staff who lost their jobs before April 1992. Extra payments will be due for staff since made redundant. BC owes the staff scheme pounds 480m in staged payments; they are supposed to pay pounds 109m tomorrow, but have made a 'loan' until a court decision is made.

Philip Hutchinson, BC's legal affairs director, said: 'Our legal advice is that we can use our proportion of the surplus in this way. We are making available an interest-free loan to the fund while the issue is resolved.'

BC confirmed yesterday it has obtained indemnity from the DTI for any court costs it incurs.

The trustees say BC needs their permission to remove money from the funds. Bob Chappell, of the British Association of Colliery Management, one of four union trustees who sits along with four BC representatives on the pension fund board, said: 'If BC can break one set of rules then they can break others - that's what Robert Maxwell did.

'It is outrageous - they are not allowed to take money out of the scheme, this is clearly stated in the rules to protect the pension funds. There's no doubt the DTI are behind this, they are obviously desperate to save money.'

Mr Chappell said in the late- 1980s the trustees made a 'gentleman's agreement' with BC, who were allowed to delay the payment of the pounds 480m. 'I wish to God we had taken the money then.'

Tim Eggar, the DTI Minister of State for the coal industry, said: 'We have given an absolute undertaking that the interests of the pensioners will be guaranteed, and I understand that British Coal, having already taken legal advice, are likely to seek a court order before any final decision is taken.'

Under an arrangement made 10 years ago by John Moore, then parliamentary under-secretary at the Department of Energy, the Government pays a rebate of pounds 100m a year, which would now halt if BC wins the argument.

Martin O'Neill, Labour energy spokesman, said that the Labour Party will ensure 'it is the Government, and not the coal communities, that pay for the Govern ment's financial incompetence.'