Coal companies and mine workers reach pension deal

Wednesday, 22 Jun 2011

The United Mine Workers of America reached a deal with a coal industry association to preserve pensions for nearly 120,000 current retirees, their dependents and active miners, but it agreed to a shift toward 401 plans for miners hired in 2012 and beyond.

Industry experts said the contract with the Bituminous Coal Operators Association attempts to address the underfunding of the mine workers pension program which was hurt by the 2008 stock market drop. The plan had assets of USD 4.3 billion and paid out USD 650 million a year in 2010 and it was less than 80% funded. The pension program includes 70,000 UMWA retirees and 25,000 miners who are still active or who have yet to begin drawing pension benefits.

Under the new deal announced by the union, coal operators will continue to contribute USD 5.50 per hour worked to the existing pension plan. But beginning January 1 companies will contribute USD 1 per hour worked to 401 plans for newly hired miners. Beginning in 2014, the contribution will increase to USD 1.50 an hour for that group of workers.

Mr Jim Thompson editor of Coal and Energy Price Report an industry trade publication said "Putting the new miners on a 401 plan relieves the pressure that they were going to have to jack way up the funding of the old plan."

The pension changes will apply to all US coal operators with union miners because they were agreed to by Consol Energy Inc of Pittsburgh, the primary member of the Bituminous Coal Operators Association. Federal law requires companies that are part of the UMWA Health and Retirement Funds to follow pension terms agreed to by the association.

A spokesman for the coal operators association said the group was pleased that the agreement was ratified.

The UMWA contract that Consol agreed to also includes pay and health-care terms. Other coal operators can negotiate those terms separately, but the union hopes to use the agreement as a pattern for the other operators.

Consol, which has 3,000 unionized miners covered by the contract, agreed to wage increases of $6.00 per hour from July 1 through the end of the contract in December 2016. The contract also preserves health benefits for current unionized workers and retirees.

A Consol spokeswoman couldn't be reached to comment.

The union called the pay increase the largest in dollar terms over the life of a single agreement in the union 121 year history. (sourced from WSJ)