A majority of the 122,000 workers affected by the closure of a crisis-hit 15-billion-pound pension scheme have signed up to a deal to switch to a new pension plan backed by Tata Steel UK.
A majority of the 122,000 workers affected by the closure of a crisis-hit 15-billion-pound pension scheme have signed up to a deal to switch to a new pension plan backed by Tata Steel UK. It was confirmed that around 97,000 members returned their option forms to indicate if they agreed to move their retirement funds from the British Steel Pension Scheme (BSPS) into the new plan, with just 14 per cent choosing to remain with the old scheme. “As part of one of the largest pension consultations conducted in the UK, option packs were issued to the Scheme’s membership of around 122,000. Just under 97,000 members completed and returned option forms, of which 86 per cent were from members choosing to switch to the New BSPS,” a BSPS statement said. An estimated 25,000 members who did not respond in time will stay on in the present scheme to start automatically moving with it into the Pension Protection Fund (PPF) at the end of March as part of a deal struck between the Indian steel giant and the UK’s Pensions Regulator last year. Allan Johnston, chairman of the BSPS trustees, said: “I am pleased so many scheme members took the time to choose the outcome that was best for them based on their personal circumstances”. “The New BSPS offers benefits that for most members are the same or better than the PPF and around 83,000 members have chosen to switch to the New Scheme,” the statement said.
Tata Steel UK also welcomed the outcome of the consultation exercise as a “positive choice” by a majority of the workers. “Although much work is still needed to deliver a secure future in our UK business, the progress with pensions is welcome,” a company spokesperson said. “We are also pleased to note the trustee expects the new scheme to pass the agreed qualifying conditions to go forward,” he noted. Steel workers had welcomed the agreement struck in September 2017, with unions committing to persuading their members to sign up to the new scheme. They have now expressed concerns that a failure to respond in time could hit some of the workers hard.
“Community warned the government that thousands of BSPS members would default into the PPF against their interests simply because they failed to return a form,” said Alasdair McDiarmid, Operations Director at the steelworkers’ union Community. His group had called for action to be taken to ensure those who did not respond to the consultation would automatically join the new BSPS2 as they would be better off in the new scheme. “This scandalous inaction means that thousands of steelworkers will now be worse off in retirement,” he said. An agreement to detach the BSPS from Tata Steel’s UK business involved the Indian company offering to pay 550 million pounds into the now-closed BSPS and give the fund, which is set to transfers to the PPF, a 33 per cent stake in its UK business.
The so-called Regulated Apportionment Arrangement (RAA) signed by Tata Steel with the trustee of the BSPS was seen as crucial to clear the path for the UK arm of the Indian steel major’s merger with German giant ThyssenKrupp. “The RAA is one important milestone in Tata Steel UK’s journey towards a sustainable and enduring future, with pension obligations, whose risk profile would be consistent with the underlying business,” Koushik Chatterjee, Tata Steel’s group executive director, said last year. The BSPS had been the main barrier to any future plans for Tata Steel in the UK, which still owns the Port Talbot unit in south Wales – Britain’s largest steelworks.