Tata Steel UK said the British Steel Pension Scheme (BSPS) has been separated from itself and a number of affiliated companies.
The company said it had confirmation from that country's pensions regulator for approval on a Regulated Apportionment Arrangement (RAA) in respect of the former's British Steel Pension Scheme (BSPS).
As part of the RAA, a payment of 550 million euros from Tata Steel UK has been made to the BSPS and shares in Tata Steel UK, equivalent to a 33% economic equity stake in the company, have been issued to the BSPS Trustee under the terms of a shareholders’ agreement, said Tata Steel.
Tata Steel UK has also agreed to sponsor a proposed new pension scheme, subject to some qualifying conditions being met. With the RAA completed, all members of the BSPS will be invited to transfer to the new scheme.
If the qualifying conditions are met, members who choose to will transfer to the new scheme. The latter would have lower future annual increases for pensioners and deferred members than the earlier BSPS, giving it an improved funding position which would pose significantly less risk for Tata Steel UK.
“Completion of the RAA follows many months of hard work to provide the most sustainable outcome for pensioners, current employees and the business,” the company statement quoted Koushik Chatterjee, Tata Steel’s group executive director.
Who then added: “Although much work is still needed to ensure the business is competitive in future, the next step in this pensions process involves necessary formalities to set up the new scheme with a lower risk profile, following the necessary member consent process led by the trustee. This will take some time to implement, given the wide membership base."