PPF takes on UK Coal

It was announced that the defined benefit pension scheme of UK Coal plc will move into the PPF as part of a wider restructuring under the terms of the group’s administration.

The deal is expected to secure benefits for around 7,000 scheme members as well as secure 2,000 jobs of its mining operation.  The PPF will take on the pension scheme deficit and in return will receive regular payments from a new company which are expected to be materially higher than the amount it could have received had the company become insolvent.  Although the PPF will not own the new company, its interest in the new company will consist of a series of debt instruments.

The agreement means that the deal constitutes one of the largest deficits yet assimilated by the lifeboat fund; in early 2013, a report by the Pensions Regulator estimated the aggregate deficit to be £900m on a ‘buy-out’ basis.