Tata Steel signs agreement for new pensions deal
11 August 2017 News
Steel company Tata has formally announced it is to separate its UK pension scheme from the business.
It could mean a potential merger between the Indian-owned firm and the German steel producer ThyssenKrupp is more likely to move forward.
The £15bn British Steel Pension Scheme (BSPS) has been a significant barrier to any agreement.
Tata has been in negotiations with pension regulators and trustees of the scheme.
The agreement with trustees follows a deal between unions and the company which will see reduced benefits for current employees.
But the decision will also affect all members of the pension scheme, including the many thousands already retired.
About 8,000 people are employed by Tata Steel across England and Wales, including 3,500 in Port Talbot. But there are 130,000 steel pension scheme members across the UK.
Tata Steel UK has offered to pay £550m into its now-closed pension scheme and give the fund a 33% stake in its UK business.
It means Tata would no longer have any responsibility for the pension scheme.
Future pension increases for current and retired steelworkers will be less under the new scheme – but there will be no reduction in the lump sums they have already built up.
All members of the British Steel Pension Scheme (BSPS) will now be invited to transfer to the new scheme.
They will also have the option of transferring into the pension protection fund (PPF) – the pension lifeboat – although they could lose more money.
Thousands of workers voted to back the deal in February.
Koushik Chatterjee, Tata Steel’s group executive director, said it had been a long and detailed process but this was an “important milestone in Tata Steel UK’s journey towards a sustainable and enduring future”.
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He added: “Considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the regulated apportionment arrangement (RAA) presents the best possible structural outcome for the members of the BSPS and for the Tata Steel UK business.”
Trade unions Community, GMB and Unite said: “For over a year our members have feared for their security in retirement and this announcement helps to bring that uncertainty to an end.”
But they added that members had been “extremely disappointed at the unacceptable lack of communication” in recent months.
“This has to change immediately,” said the unions in a statement. “The company and the trustees must remember they are dealing with people’s long term future, their life savings and their family’s financial security; it is vital members are given all the support that they need.”