Twenty five hundred jobs and the pension savings of 6800 people have been spared due to the new structure under which UK Coal will operate.

Aon Hewitt has announced that it advised the Industry-Wide Mineworkers' Pension Scheme and the Industry-Wide Coal Staff Superannuation Scheme on the restructuring announced this morning by UK Coal PLC.

UK Coal, which was renamed Coalfield Resources and generates about 5% of Britain's electricity, has now split its operations into two separate entities; mining arm Mine Holdings and property division Harworth Estates. The move will safeguards around 2500 jobs.

Under the terms of the restructuring, the mining business of UK Coal will continue as employer sponsor of the pension schemes. In return for giving up any potential claim against the property business, the two pension schemes have a 75.1% shareholding in the new property business, Harworth Estates.

The pension schemes have also injected £30m of capital into Harworth Estates to ensure that it has the necessary funds to develop the properties and thereby achieve the maximum value for the pension schemes in the long term. Overall, the restructuring has helped to protect the pension benefits of the schemes' 6,800 members.

Donald Duval, partner at Aon Hewitt and actuary to the pension schemes said: "The split of the business, with the pension schemes taking the majority share in the property business, is an innovative solution to the problem of funding the pension schemes while allowing the companies to invest in the business.

"This is an excellent outcome for the business, the trustees and the members – particularly as the alternative might well have been the schemes entering the Pension Protection Fund, which would have meant much-reduced benefits for the members."

First published 11.12.12

azeevalkink@wilmington.co.uk