News: Tata Steel proposes changes to pension scheme
Tata Steel UK has reached an agreement with trade unions and will start consultation with its employees on a proposal to close the British Steel Pension Scheme to future accrual.
The Indian-owned steel maker has also announced outline plans to invest £1 billion in its remaining UK assets - which is unlikely to include the Speciality Steel sites in South Yorkshire.
Earlier this year, the Government launched a consultation on changes to the British Steel Pension Scheme (BSPS) - the huge pension liability with a £700m deficit that was seen as a deal-breaker for prospective buyers of Tata Steel's UK assets.
The consultation followed intense discussions between Tata Steel, the UK government, the pension scheme trustees and regulators to find the best option for members of the scheme.
Eight months after Tata announced their original intention to sell its UK steel assets, the firm has now made a commitment to secure the future of jobs and production at Port Talbot and other steelworks across the UK.
The new announcement follows the announcement at the end of last month over exclusive negotiations between Tata Steel and Liberty House Group regarding the sale of Tata's Speciality Steels division, which includes facilities in Rotherham.
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Previous proposals to amend scheme benefits in order to avoid entering the PPF would be difficult to deliver. The Pension Protection Fund (PPF) is the safety net that provides compensation to members of eligible defined benefit pension schemes when things go wrong.
Tata Steel will begin a consultation on the closure of the BSPS to future accrual, replacing it with a defined contribution scheme with maximum contributions of 10% from the company and 6% from employees.
The scheme has 130,000 members. Of these, 14,000 are active (i.e. they are currently employed by Tata Steel or another sponsoring employer of the scheme), 32,000 are deferred (i.e. no longer employed by Tata Steel but below the scheme's normal pension age and with a pension not in payment) and 84,000 are pensioners.
A statement from Tata Steel said that: "The company and trade unions have also agreed on the principle that subject to the structural de-risking and de-linking of the British Steel Pension Scheme fund from the business, Tata Steel UK will continue the existing blast furnace configuration in Port Talbot until 2021."
It could see a comprehensive ten year £1bn investment plan to support steel making at Port Talbot and across the UK which has been welcomed by unions that, at the same time, stated that the move to close the BSPS will clearly be of serious concern to all members. A ballot is proposed in the new year.
Roy Rickhuss from steelworker's union, Community, said: "Reaching this stage of the process is a credit to the hard work of our members who never gave up the fight to "Save Our Steel" – it was their jobs on the line and it has been their campaign that has brought Tata to this position.
"This is not the end of the process and it will be for all our members to now vote on this proposal. We will continue to work closely with Tata and all levels of government as we seek to build a sustainable future for Britain's steel industry.
"We recognise that today's announcement does not cover the Speciality Steels business in South Yorkshire or the SAW mills in Hartlepool. We will continue to work hard with the companies involved to secure the investment necessary to ensure those businesses grow and that our members are protected."
Tata Steel website
Images: Tata Steel
The Indian-owned steel maker has also announced outline plans to invest £1 billion in its remaining UK assets - which is unlikely to include the Speciality Steel sites in South Yorkshire.
Earlier this year, the Government launched a consultation on changes to the British Steel Pension Scheme (BSPS) - the huge pension liability with a £700m deficit that was seen as a deal-breaker for prospective buyers of Tata Steel's UK assets.
The consultation followed intense discussions between Tata Steel, the UK government, the pension scheme trustees and regulators to find the best option for members of the scheme.
Eight months after Tata announced their original intention to sell its UK steel assets, the firm has now made a commitment to secure the future of jobs and production at Port Talbot and other steelworks across the UK.
The new announcement follows the announcement at the end of last month over exclusive negotiations between Tata Steel and Liberty House Group regarding the sale of Tata's Speciality Steels division, which includes facilities in Rotherham.
Advertisement
Previous proposals to amend scheme benefits in order to avoid entering the PPF would be difficult to deliver. The Pension Protection Fund (PPF) is the safety net that provides compensation to members of eligible defined benefit pension schemes when things go wrong.
Tata Steel will begin a consultation on the closure of the BSPS to future accrual, replacing it with a defined contribution scheme with maximum contributions of 10% from the company and 6% from employees.
The scheme has 130,000 members. Of these, 14,000 are active (i.e. they are currently employed by Tata Steel or another sponsoring employer of the scheme), 32,000 are deferred (i.e. no longer employed by Tata Steel but below the scheme's normal pension age and with a pension not in payment) and 84,000 are pensioners.
A statement from Tata Steel said that: "The company and trade unions have also agreed on the principle that subject to the structural de-risking and de-linking of the British Steel Pension Scheme fund from the business, Tata Steel UK will continue the existing blast furnace configuration in Port Talbot until 2021."
It could see a comprehensive ten year £1bn investment plan to support steel making at Port Talbot and across the UK which has been welcomed by unions that, at the same time, stated that the move to close the BSPS will clearly be of serious concern to all members. A ballot is proposed in the new year.
Roy Rickhuss from steelworker's union, Community, said: "Reaching this stage of the process is a credit to the hard work of our members who never gave up the fight to "Save Our Steel" – it was their jobs on the line and it has been their campaign that has brought Tata to this position.
"This is not the end of the process and it will be for all our members to now vote on this proposal. We will continue to work closely with Tata and all levels of government as we seek to build a sustainable future for Britain's steel industry.
"We recognise that today's announcement does not cover the Speciality Steels business in South Yorkshire or the SAW mills in Hartlepool. We will continue to work hard with the companies involved to secure the investment necessary to ensure those businesses grow and that our members are protected."
Tata Steel website
Images: Tata Steel
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