UK Coal and the pension problem

The start of a wider change?

When the National Coal Board was privatised in 1994 to become UK Coal Plc, the government must have thought that was the end of its involvement in the business and, as a consequence, its expensive defined benefit pension scheme. One wonders, therefore, what rumblings in the Houses of Parliament have resulted from the recent restructuring of UK Coal, which has meant that the expensive pension scheme has been taken back into the public fold by transfer into the Pension Protection Fund (the PPF).

It is not that long ago that the Pensions Regulator, established by the Pensions Act 2004, was pushing firmly against what is known as "scheme abandonment", that is, a restructuring of a business extracting the pension scheme from the ongoing enterprise. At first glance, the restructuring of UK Coal may look like a reversal of that approach, but the detail of the restructuring suggests otherwise.

The UK Coal scheme is unique in many respects in that it is protected by legislation (the Coal Industry (Protected Persons) Pensions Regulators 1994) and comes with a lot of baggage. The desire to protect beneficiaries of the scheme must have been high on the agenda during the regulator's review of the proposal, together with the objective of saving jobs for the 2000 employees of UK Coal.

The restructuring proposal involved the transfer of the business into two new companies: one to hold the mining element of the business and the other to hold the brownfield development side. UK Coal's initial proposal involved all contributions ceasing once the scheme had gone into the PPF, with the scheme taking an equity stake in the brownfield development side of the business. This would have resulted in the effective dumping of all accrued and future liabilities of the scheme on the public purse with UK Coal continuing to trade, deficit free. It will come as no surprise that this proposal was rejected by the regulator.

UK Coal pleaded that the size of the scheme deficit (£900m on a buy-out basis) meant that if the PPF did not take the scheme in full, it would be forced to enter into an insolvency procedure, putting 2000 jobs at risk.

However, it appears from the regulator's report under s89 Pensions Act 2004 that during discussions, a potential creative solution was developed that improved the insolvency analysis and which meant that UK Coal would avoid an insolvency process and continue to fund the scheme through the PPF, thus improving the position for scheme members.

The end result has not let UK Coal off the hook and should not be seen in any way as a precedent, as the solution reached was very specific to the circumstances at hand and the fact that the regulator and the PPF were involved from the start. No dividends from the mining company to its shareholders until the scheme is fully funded and the scheme having a 75.1% equity stake in the brownfield development company means that the scheme controls the lion's share of the economic interest in the whole business.

This is certainly not a scheme abandonment and will be welcomed by all stakeholders in the UK Coal scheme. Although unusual for the PPF to take on a scheme when the business is continuing to be profitable, it should be encouraging to other businesses which may need to look for flexible ways to deal with a scheme deficit. And, of course, the beneficiaries of those schemes who can perhaps be more confident that the PPF will not simply give in to companies threatening insolvency if the PPF does not take on their pension liabilities.

Jessica Walker is a senior associate in the Restructuring, Bankruptcy & Insolvency group at Mayer Brown.

This piece first appeared on economia

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“I felt very lonely”: addressing the untold story of isolation among young mothers

With one in five young mothers lonely “all the time”, it’s time for employers and services to step up.

“Despite having my child with me all the time, I felt very lonely,” says Laura Davies. A member of an advisory panel for the Young Women’s Trust, she had her son age 20. Now, with a new report suggesting that one in five young mums “feels lonely all the time”, she’s sharing her story.

Polling commissioned by the Young Women’s Trust has highlighted the isolation that young motherhood can bring. Of course, getting out and about the same as you did before is never easy once there’s a young child in the picture. For young mothers, however, the situation can be particularly difficult.

According to the report, over a quarter of young mothers leave the house just once a week or less, with some leaving just once a month.

Aside from all the usual challenges – like wrestling a colicky infant into their jacket, or pumping milk for the trip with one hand while making sure no-one is crawling into anything dangerous with the other – young mothers are more likely to suffer from a lack of support network, or to lack the confidence to approach mother-baby groups and other organisations designed to help. In fact, some 68 per cent of young mothers said they had felt unwelcome in a parent and toddler group.

Davies paints what research suggests is a common picture.

“Motherhood had alienated me from my past. While all my friends were off forging a future for themselves, I was under a mountain of baby clothes trying to navigate my new life. Our schedules were different and it became hard to find the time.”

“No one ever tells you that when you have a child you will feel an overwhelming sense of love that you cannot describe, but also an overwhelming sense of loneliness when you realise that your life won’t be the same again.

More than half of 16 to 24-year-olds surveyed said that they felt lonelier since becoming a mother, with more than two-thirds saying they had fewer friends than before. Yet making new friends can be hard, too, especially given the judgement young mothers can face. In fact, 73 per cent of young mothers polled said they’d experienced rudeness or unpleasant behaviour when out with their children in public.

As Davies puts it, “Trying to find mum friends when your self-confidence is at rock bottom is daunting. I found it easier to reach out for support online than meet people face to face. Knowing they couldn’t judge me on my age gave me comfort.”

While online support can help, however, loneliness can still become a problem without friends to visit or a workplace to go to. Many young mothers said they would be pleased to go back to work – and would prefer to earn money rather than rely on benefits. After all, typing some invoices, or getting back on the tills, doesn’t just mean a paycheck – it’s also a change to speak to someone old enough to understand the words “type”, “invoice” and “till”.

As Young Women’s Trust chief executive Dr Carole Easton explains, “More support is needed for young mothers who want to work. This could include mentoring to help ease women’s move back into education or employment.”

But mothers going back to work don’t only have to grapple with childcare arrangements, time management and their own self-confidence – they also have to negotiate with employers. Although the 2003 Employment Act introduced the right for parents of young children to apply to work flexibly, there is no obligation for their employer to agree. (Even though 83 per cent of women surveyed by the Young Women’s Trust said flexible hours would help them find secure work, 26 per cent said they had had a request turned down.)

Dr Easton concludes: “The report recommends access to affordable childcare, better support for young women at job centres and advertising jobs on a flexible, part-time or job share basis by default.”

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland