That hurdle was removed after Tata Steel on Monday received regulatory clearance on a pension deal initially reached a month ago, enabling it to separate its United Kingdom pension scheme from the group.
Indian-owned Tata employs 8,500 steelworkers in the United Kingdom – more than 600 of them in the Black Country at sites in Wednesfield, Walsall and Brierley Hill – but the £15 billion British Steel Pension Scheme (BSPS) it inherited has more than 125,000 members.
Tata Steel has officially ditched its £15bn, 130,000-member United Kingdom pension scheme.
As part of the deal, the BSPS received £550m from Tata Steel and a 33 per cent equity stake in Tata’s United Kingdom steel operations. The new scheme would have lower future annual increases for pensioners and deferred members than the British Steel Pension Scheme, giving it an improved funding position which will pose significantly less risk for Tata Steel UK.
Tata Steel has also agreed to sponsor a proposed new pension scheme, subject to certain qualifying conditions being met.
Germany’s steel company Thyssenkrupp said today it could reach an agreement in principle to merge its European steel business with Tata Steel.
“If the qualifying conditions are met, members who choose to will transfer to the new scheme”.
“This will take some time to implement, given the wide membership base. The net financial impact of RAA including the payment of the agreed 550 million pound will be reflected in Q2 FY18 financials for the company”, he added.
The BSPS had been the major hurdle to future plans for Tata Steel in the United Kingdom and the latest move had been welcomed by workers’ unions who had voted in favour of a deal earlier this year.
Accounts for the year to the end of March 2017 show Tata Steel UK reported an annual pre-tax loss of £558m, up from £426m in the previous period.