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Tata Steel in talks to cut its UK pension scheme benefits - Trustees | Reuters

LONDON Tata Steel is in talks with stakeholders to cut its UK pension benefits and end its liability for the scheme, according to a statement from the trustees of its British Steel Pension Scheme (BSPS).Tata Steel, the UK's largest steelmaker, is currently in talks to merge its European assets with Germany's Thyssenkrupp but the success of those talks hinges on Tata being able to separate itself from its pension scheme.The 15 billion pound ($18.2 billion) scheme, which Tata inherited in 2007 when it bought Corus, formerly state-owned British Steel, is one of the largest defined benefit, or final salary, UK pension schemes. Its deficit stood at 50 million pounds last October, though it stood at 700 million pounds earlier in the year and could easily balloon again, depending on market conditions. .Given that position, the company is seeking a deal with the pensions regulator and other stakeholders to cut benefits for all members but keep them above levels that would be offered by the Pension Protection Fund (PPF) -- a lifeboat for failing schemes.

If a deal were struck, the idea would be for the scheme to be run by the trustees without the financial backing of Tata. "The Trustees hope and expect to be able to provide better benefits for members than PPF compensation. This could be done by transferring members and assets to a new scheme with modified benefits," the BSPS trustees said.

Tata Steel has meanwhile offered to invest in its British business and guarantee the jobs of its 11,000 UK employees if they vote in favour of closing the pension scheme to future accrual and moving on to a less generous scheme.The UK business has made consistent losses since Indian-owned Tata bought it 2007.

Employees will vote on the deal at the end of this month. ($1 = 0.8228 pounds) (Reporting by Maytaal Angel and Carolyn Cohn; Editing by Keith Weir)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date: Jan 13, 2017 21:40 PM

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