Tata Steel seals pensions deal
The final move to secure the pensions of tens of thousands of steelworkers – many of them in the Black Country – has been announced, ending any fresh doubts about future payments.
Steel giant Tata gave details of a new scheme to replace the British Steel Pension Scheme (BSPS).
Workers voted earlier this year to accept lower benefits in return for investment which will secure jobs.
Tat Steel now employs around 8,500 in the UK, more than 600 of them in the Black Country at sites in Wednesfield, Walsall and Brierley Hill.
But the move will affect hundreds more who have worked in the steel industry in the area over the years. There are 125,000 steel pensioners across the UK who worked at British Steel, its successor Corus and the latest owner, Tata.
Finalising the pension arrangements is expected to clear the way for Tata to merge its European steel business with German firm Thyssen Krupp.
Tata Steel UK said it had signed the documentation for a so-called regulated apportionment arrangement (RAA) with the Trustee of the British Steel Pension Scheme, offering "more sustainable outcomes" for pensioners, employees and the business.
When the RAA takes effect the British Steel Pension Scheme will be separated from Tata Steel UK and a number of affiliated companies.
The steel trade unions, Community, Unite and GMB, said in a statement: "We welcome the RAA announcement which includes a commitment that Tata will stand behind a new scheme with reduced annual increases.
"For over a year our members have feared for their security in retirement, and this announcement helps to bring that uncertainty to an end."
Tata steel says the deal follows "prolonged and intense discussions" and negotiations with the BSPS, the Pension Regulator and the Pension Protection Fund, the industry lifeboat for pensions.
It will see Tata Steel UK make a payment of £550 million to the British Steel Pension Scheme. At the same time the British Steel Pension Scheme Trustee will get a one third stake in the steel business.
While it seperates the old pension from Tata Steel the company is sponsoring a new pension scheme for its workers.
Koushik Chatterjee, Tata Steel’s group executive director, said: “Considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the RAA presents the best possible structural outcome for the members of the British Steel Pension Scheme and for the Tata Steel UK business.
“The RAA is one important milestone in Tata Steel UK’s journey towards a sustainable and enduring future, with pension obligations, whose risk profile would be consistent with the underlying business. The net financial impact of the RAA including the payment of the agreed amount would be reflected in the Q2 FY’18 financials for the company.”
The union statement added: "We fought to ensure that our members can choose whether they want to transfer to a new modified scheme, underpinned by Tata, or to remain in the BSPS and therefore receive Pension Protection Fund (PPF) compensation. Now that this choice is being 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.
"Our members have been extremely disappointed at the unacceptable 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."