Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Tata Steel in talks to cut its UK pension scheme benefits - Trustees

Published 13/01/2017, 18:50
Updated 13/01/2017, 18:50
© Reuters. File photo of company logo seen outside the Tata steelworks near Rotherham in Britain

© Reuters. File photo of company logo seen outside the Tata steelworks near Rotherham in Britain

LONDON (Reuters) - Tata Steel (NS:TISC) is in talks with stakeholders to cut its UK pension benefits and end its liability for the scheme, according to a statement from the trustees of its British Steel Pension Scheme (BSPS).

Tata Steel, the UK's largest steelmaker, is currently in talks to merge its European assets with Germany's Thyssenkrupp (DE:TKAG) but the success of those talks hinges on Tata being able to separate itself from its pension scheme.

The 15 billion pound scheme, which Tata inherited in 2007 when it bought Corus, formerly state-owned British Steel, is one of the largest defined benefit, or final salary, UK pension schemes.

Its deficit stood at 50 million pounds last October, though it stood at 700 million pounds earlier in the year and could easily balloon again, depending on market conditions. .

Given that position, the company is seeking a deal with the pensions regulator and other stakeholders to cut benefits for all members but keep them above levels that would be offered by the Pension Protection Fund (PPF) -- a lifeboat for failing schemes.

If a deal were struck, the idea would be for the scheme to be run by the trustees without the financial backing of Tata.

"The Trustees hope and expect to be able to provide better benefits for members than PPF compensation. This could be done by transferring members and assets to a new scheme with modified benefits," the BSPS trustees said.

Tata Steel has meanwhile offered to invest in its British business and guarantee the jobs of its 11,000 UK employees if they vote in favour of closing the pension scheme to future accrual and moving on to a less generous scheme.

The UK business has made consistent losses since Indian-owned Tata bought it 2007.

© Reuters. File photo of company logo seen outside the Tata steelworks near Rotherham in Britain

Employees will vote on the deal at the end of this month.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.