Tata Steel completes United Kingdom business pension deal

Tata Steel completes United Kingdom business pension deal

Tata Steel Ltd has received regulatory approval for a deal to cut its United Kingdom pension scheme liabilities, it said on Friday, paving the way for a possible merger between its British and European steel businesses and those of Germany's Thyssenkrupp.

When the arrangement takes effect, the British Steel Pension Scheme will be separated from the steel maker and a number of affiliated companies, it said in a statement.

The RAA process has been a long and detailed one, and I would like to thank the Pensions Regulator, Pension Protection Fund, the Trustee of the British Steel Pension Scheme, its members, the unions and employees - indeed, all our stakeholders, including the governments of the United Kingdom and Wales, for their constructive engagement through the process. The Pension Protection Fund has also issued confirmation of non-objection to the RAA on Friday.

The development follows the company's announcement on May 16 that the key commercial terms of an RAA had been agreed in principle between the company and pension scheme trustee. It was noted at that time that the RAA remained subject to the agreement of detailed documentation with the pension scheme Trustee, as well as formal approval by the UK Pensions Regulator and non-objection from the UK Pension Protection Fund. It would effectively mean that Tata Steel 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" claims the BBC report.

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

"If stressed pension funds were allowed to restructure in a more transparent way, a pension fund equivalent of Chapter 11, risk could be better shared between the company, the members and the PPF", Rosenberg said.

More news: Ahmed Patel's victory in RS polls calls for introspection in Congress party

The British Steel Pension Scheme said it would write to its members in the next few weeks about the new scheme.

"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", the Community, Unite and GMB unions said in a joint statement.

"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 regulator is willing to work closely and constructively with employers who face real challenges in meeting their pension obligations due to hard trading conditions.This proposal brings greater certainty for pension scheme members and unlocks the possibility of restructuring the company, which in turn could lead to preserving jobs".

Lesley Titcomb, chief executive of the Pensions Regulator, said: "We do not agree to these types of arrangements lightly".

Unions welcomed the RAA and TSUK's commitment to the new scheme, which put an end to the uncertainty their members had faced for over a year.

Related Articles