Progress on future of British Steel Pension Scheme
18 May 2017
Tata Steel has reached an outline agreement over the restructuring of its pension scheme.
BBC News has reported that Tata Steel UK has offered to pay £550m into its now-closed pension scheme and give the fund a 33% stake in its UK business.
The former British Steel scheme was shut at the end of March as part of Tata's plan to avoid going bust. Tata said the injection of new cash and assets had been drawn up after talks with the UK pension authorities and the scheme's trustees.
The proposed deal, which involves the UK's pensions regulator and the Pension Protection Fund (PPF), aims to absolve Tata Steel of any further responsibility for the final-salary scheme
In a statement from The Pensions Regulator, Chief Executive Lesley Titcomb said:
“Good progress is being made in our discussions with Tata Steel UK (TSUK) and the trustees about the future of the British Steel Pension Scheme (BSPS). The key commercial terms of a regulated apportionment arrangement (RAA) have been agreed in principle between the company and the BSPS trustee. These appear to be in line with our published principles.
However, there are still important details to be finalised before we are in a position to approve the RAA and we are considering these carefully in light of their impact upon the 130,000 pension scheme members and PPF levy payers.
Pension restructurings which involve an RAA are rare, and we will only approve an RAA where stringent tests are met, so that they are not abused by employers seeking to inappropriately offload their pension liabilities.
We also continue to work with TSUK and the trustee in respect of the proposal to offer members an option to transfer to a new scheme sponsored by TSUK, which may occur should the approval to the RAA be granted, or stay in the BSPS and receive PPF compensation. The successor scheme would be subject to qualifying conditions.”