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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The dog at the end of the lead may be small, but in fact what I’m walking is a hound of love

There is a new, hairy face in the Hovel.

There is a new, hairy face in the Hovel. I seem to have become a temporary co-owner of an enthusiastic Chorkie. A Chorkie, in case you’re not quite up to speed with your canine crossbreeds, is a mixture of a chihuahua and a Yorkshire Terrier, and while my friend K— busies herself elsewhere I am looking after this hound.

This falls squarely into the category of Things I Never Thought I’d Do. I’m a cat person, taking my cue from their idleness, cruelty and beauty. Dogs, with their loyalty, their enthusiasm and their barking, are all a little too much for me, even after the first drink of the day. But the dog is here, and I am in loco parentis, and it is up to me to make sure that she is looked after and entertained, and that there is no repetition of the unfortunate accident that occurred outside my housemate’s room, and which needed several tissues and a little poo baggie to make good.

As it is, the dog thinks I am the bee’s knees. To give you an idea of how beeskneesian it finds me, it is licking my feet as I write. “All right,” I feel like saying to her, “you don’t have to go that far.”

But it’s quite nice to be worshipped like this, I have decided. She has also fallen in love with the Hovel, and literally writhes with delight at the stinky cushions on the sofa. Named after Trude Fleischmann, the lesbian erotic photographer of the Twenties, Thirties and Forties, she has decided, with admirable open-mindedness, that I am the Leader of the Pack. When I take the lead, K— gets a little vexed.

“She’s walking on a loose lead, with you,” K— says. “She never does that when I’m walking her.” I don’t even know what that means, until I have a think and work it out.

“She’s also walking to heel with you,” K— adds, and once again I have to join a couple of mental dots before the mists part. It would appear that when it comes to dogs, I have a natural competence and authority, qualities I had never, not even in my most deranged flights of self-love, considered myself to possess in any measurable quantity at all.

And golly, does having a dog change the relationship the British urban flâneur has with the rest of society. The British, especially those living south of Watford, and above all those in London, do not recognise other people’s existence unless they want to buy something off them or stop them standing on the left of the sodding escalator, you idiot. This all changes when you have a dog with you. You are now fair game for any dog-fancier to come up to you and ask the most personal questions about the dog’s history and genealogy. They don’t even have to have a dog of their own; but if you do, you are obliged by law to stop and exchange dog facts.

My knowledge of dog facts is scant, extending not much further beyond them having a leg at each corner and chasing squirrels, so I leave the talking to K—, who, being a friendly sort who could probably talk dog all day long if pressed, is quite happy to do that. I look meanwhile in a kind of blank wonder at whichever brand of dog we’ve just encountered, and marvel not only at the incredible diversity of dog that abounds in the world, but at a realisation that had hitherto escaped me: almost half of London seems to have one.

And here’s the really interesting thing. When I have the leash, the city looks at me another way. And, specifically, the young women of the city. Having reached the age when one ceases to be visible to any member of the opposite sex under 30, I find, all of a sudden, that I exist again. Women of improbable beauty look at Trude, who looks far more Yorkie than chihuahua, apart from when she does that thing with the ears, and then look at me, and smile unguardedly and unironically, signalling to me that they have decided I am a Good Thing and would, were their schedules not preventing them, like to chat and get to know me and the dog a bit better.

I wonder at first if I am imagining this. I mention it to K—.

“Oh yes,” she says, “it’s a thing. My friend P-J regularly borrows her when he wants to get laid. He reckons he’s had about 12 shags thanks to her in the last six months. The problems only arise when they come back again and notice the dog isn’t there.”

I do the maths. Twelve in six months! That’s one a fortnight. An idea begins to form in my mind. I suppose you don’t have to be a rocket scientist to work out what it is. But no. I couldn’t. Could I?

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 28 April 2016 issue of the New Statesman, The new fascism