Tata Steel Yet to Convince UK Pension Regulator Over Scheme Closure
Company said it would close its final salary pension scheme to accruals from March 31
“It is not going to be easy for the Tatas to convince the regulator.
Hefty compensation will have to be paid,” Harish Patel, national officer
(metals and boundary) at Unite, Britain’s largest trade union told
Business Standard. An e-mail to the Tata Steel spokesperson went
unanswered.
“The compensation figures are large and will run into millions of
pounds. The figures are yet to be divulged and the Tatas are in talks
with the regulator,” said another person close to the development on
condition of anonymity.
Tata Steel UK on Tuesday said it would close its final salary pension scheme to accruals from March 31. From April 1, employees of Tata Steel UK will save for their retirement through a new pension scheme, the release said.
“The new scheme is not as good as the British Steel Pension Scheme.
In the new scheme, the length of service will not work in favour of the
employee and the company performance will play a bigger role,” the
source said.
Employees of Tata Steel UK voted in favour of changes to their pension scheme last
month. In return, the company pledged no compulsory redundancies, one
billion pounds of investment over 10 years, and a commitment to keep two
blast furnaces open at the Port Talbot plant over the next decade. Tata
Steel had earlier warned the 15 billion pound British Steel Pension Scheme could risk the future of its UK steel business.
Tata Steel in an exchange filing this week said it was in talks with Germany-based Thyssenkrupp for a merger of their steel businesses in Europe. The clarification followed news reports that the deal was in trouble pending resolution of the pension issue.
Tata Steel last July said it was exploring a joint venture with the
German company. In March 2016, Tata Steel had announced the sale of its
UK operations due to continuous financial drain.
Waiting for the nod
- Tata Steel UK is awaiting the pension regulator’s nod for closure of the British Steel Pension Scheme
- Company may have to pay hefty compensation package to regulator
- Tata Steel UK announced closure of British Scheme to future accrual on March 7
- Tata UK employees voted in favour of changes to pension scheme in February
- In return, the company pledged no compulsory redundancies, £1 billion of investment over 10 years, and a commitment to keep two blast furnaces open at Port Talbot over the next decade
- Tata Steel had earlier warned the £15-billion pension scheme could risk the future of its UK steel business
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