Health Care

Tata Steel UK signs pension deal with the British Steel Pension Scheme

Tata Steel UK signs pension deal with the British Steel Pension Scheme

The Pension Regulator (TPR) said its move to give initial approval for the restructuring came after ensuring it met "strict criteria created to stop employers abusing the RAA mechanism" and would "prevent the company becoming insolvent....we do not agree to these types of arrangements lightly but after several months of robust negotiations in this case, we believe that it is the best outcome for everyone involved in what is a very hard situation,"' said Lesley Titcomb, the chief executive of TPR.

Under the terms of the deal, Tata will pay £550m into the 130,000 member British Steel Pension Scheme (BSPS) which is now closed, they will also hand over a 33 per cent "economic equity" stake in the United Kingdom steel business which includes the Shotton plant.

Over the past year, the Indian company has sold off some of its unprofitable assets in the United Kingdom as it sought to cut losses amid an industry slowdown and glut in supply. Thyssenkrupp had identified the pension liabilities as a major stumbling block to any possible deal and is said to have a plan B in place as talks drag on.

Steel giant Tata gave details of a new scheme to replace the British Steel Pension Scheme (BSPS).

When the new agreement comes into effect, the UK pension scheme will be separated from Tata Steel UK and a number of affiliates, the company said.

The net financial impact of the deal would be reflected in Tata Steel's second-quarter financial results, he said.

Tata Steel UK said it has also reached an agreement for the sponsorship of a proposed new pension plan.

Los Angeles City Council OKs plan for 2028 Olympic Games
He said, "I would love to bring my son back, and my grandchildren, to be able to say hey, your grandad ran in this place years ago".

Thyssenkrupp shares briefly erased losses on Friday, rising as much as 0.8 per cent after the announcement, before trading lower again.

Following the discussions, TPR was satisfied that Tata Steel UK faced insolvency within 12 months without a restructuring of the scheme.

When the RAA takes effect as planned, it would separate the British Steel Pension Scheme from Tata Steel UK and the pension scheme's other participating employers (certain subsidiaries of Tata Steel UK).

"Now that this choice has been delivered, the company and the trustees must step up to provide the necessary information and guidance to enable every member to make an informed decision in their best interests".

Under the arrangement, a new scheme will be set up, with members given the option of transferring to this scheme or remaining with the existing BSPS, which will transfer to the Pension Protection Fund (PPF) at the end of March 2018. "Our members have been extremely disappointed at the lack of communication in recent months and this has to change immediately".

"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".

Allan Johnston, chair of BSPS trustees, said: "Although the Pension Protection Fund is an important safeguard for pension schemes generally, the trustees believe that the BSPS has sufficient assets to fund benefits in the new scheme that will be better than PPF compensation for most members, and to do so on a low-risk basis sustainably into the future". The benefits offered by the new scheme are expected to be better for most members than those on offer for those from the PPF.


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