Under the changes, the company's pension scheme will be taken over by the Pension Protection Fund (PPF) - The public corporation set up to pay compensation to employees who have lost their pension as a result of their company going out of business.
The Doncaster-based company, whose future had been threatened by a devastating fire that closed the Daw Mill deep mine in March, has gone into administration as part of the restructuring process.
Professional services firm PwC have been appointed as administrators. The process will result in 350 job losses and some staff will get a 10% reduction in their pension.
Production of coal from Daw Mill generated about a third of UK Coal's revenue, and the forced closure of the mine had threatened the viability of UK Coal Operations' remaining two deep mines and six surface mines.
As a result of the problems at Daw Mill both UK Coal Mining Holdings and UK Coal Operations went into administration. However, immediately following the appointment of administrators the company's most viable assets were transferred to a new company called UK Coal Production Limited.
Difficult decisions
UK Coal chief executive Kevin McCullough said the restructuring had caused mixed emotions but this was the best outcome for everyone involved.
"Entering administration and the subsequent restructuring was the only way we could preserve any of the business and while I'm delighted we've saved 2,000 jobs, we've also had to make some very difficult decisions," he said.
"I'm pleased that we managed to transfer 120 of our Daw Mill colleagues to our other mines following the fire. Our thoughts today also rest with the 350 colleagues who will now, regrettably, be made redundant as a result of Daw Mill closing."
Details of the pension deal:
- The scheme, which has a deficit of at least £500m, will be taken over by the PPF.
- Regular payments will be made by the mining companies to the PPF.
- 3,756 existing pensioners will see no change in their pension entitlement.
- 2,077 deferred members - who have left but are not retired - and 971 active members will see a 10% reduction in their entitlement.
- Other entitlements may be restricted.
- Pensions accrued before privatisation in 1994 will be unaffected.
- Half of the current workforce are saving into a defined contribution scheme and will also be unaffected.
