Tata Steel clinches deal on pension scheme
11 August 2017 Business News
Tata Steel has clinched a deal to detach its £15bn British Steel Pension Scheme (BSPS) in a move described as offering greater certainty for its 130,000 members.
The announcement, confirming a earlier this week, could also pave the way for the Indian steelmaker to merge its European operations with German rival Thyssenkrupp.
Under an agreement with UK pensions bodies and the company’s pension trustees, Tata will inject £550m into the now-closed BSPS.
It is also handing the scheme a one-third stake in the ongoing UK operations, which include the giant Port Talbot steel works in south Wales.
The announcement formally confirms details of a deal called a Regulated Apportionment Agreement (RAA), a mechanism allowing a financially troubled employer to detach itself from defined benefit scheme liabilities.
Tata Steel said the agreement offered “more sustainable outcomes for pensioners, employees and the business”.
Koushik Chatterjee, group executive director, said it was “one important milestone in Tata Steel UK’s journey towards a sustainable and enduring future”.
He added: “Considering the continued challenges in the global steel industry as well as the uncertain global political-economic environment, the RAA represents the best possible structural outcome for the members of the British Steel Pension Scheme and for the Tata Steel UK business.”