UK – The UK’s Pensions Regulator (TPR) stopped UK Coal from transferring all or part of its two pension schemes to the Pension Protection Fund (PPF), it has confirmed.
Detailing its involvement in the former state monopoly’s decision to restructure and sell a three-quarter share of a new property developer to the trustees of the Industry-Wide Mineworkers’ Pension Scheme (IWMPS) and the Industry-Wide Coal Staff Superannuation Scheme (IWCSSS), the regulator said it did not consider the transfer of liabilities to the lifeboat fund “appropriate or reasonable”.
Publishing its report on the negotiations, TPR said UK Coal’s initial proposal was to “wholly or partially” transfer pension liabilities to the PPF via a regulated apportionment arrangement (RAA).
“This would have severed the group’s liability to fund the UK Coal Sections in full or in part and meant that members would have received PPF compensation rather than scheme benefits,” it said.
The report continued that, following “detailed discussions and consideration of analysis prepared by the trustees’ advisers”, the regulator decided the action would be inappropriate.
“As such,” it said, “the regulator indicated to the parties that it would not approve an RAA and encouraged the parties to explore possible funding solutions.”
The regulator said it believed the outcome – which saw UK Coal agree to deficit-reduction payments of £30m (€37m) per annum from 2014 onwards, as well as contribute any cash it held above a £50m threshold – had “improved the outlook for the business” and would allow continued support on part of the sponsor.
Seemingly attempting to stave off any further attempts by other sponsors to enter the PPF without insolvency proceedings, TPR added: “It remains the regulator’s view that, where an employer is able to provide appropriate long-term funding to support a viable recovery plan, this is the best outcome for members and the PPF.”