Wednesday, 9 August 2017

Tata Steel on brink of detaching £15bn British Steel pension fund

Tata Steel is within days of clinching a deal to detach its £15bn British Steel Pension Scheme (BSPS) – a move that could pave the way for it to merge its European operations with a German rival.

Sky News has learnt that the Indian steelmaker is aiming to announce on Friday afternoon that it has formally struck a deal called a Regulated Apportionment Agreement (RAA) with UK pensions bodies and the company's pension trustees.

Under the terms of the RAA, a mechanism allowing a financially troubled employer to detach itself from defined benefit pension scheme liabilities, Tata Steel will inject £550m into the now-closed BSPS, which has roughly 130,000 members.

It will also hand the scheme a one-third stake in the ongoing UK operations, which include the giant Port Talbot steelworks in Wales.

Sources close to the talks, which produced an outline agreement in May, confirmed that The Pensions Regulator (TPR), Pension Protection Fund (PPF) and BSPS trustees were all preparing to make statements acknowledging the Tata Steel agreement.

The stakeholders were hopeful of announcing a deal on Friday, although the timing remained subject to change, insiders said.

After announcing quarterly results in India earlier this week, Koushik Chatterjee, a Tata Steel director, said the company was hopeful of reaching a final agreement with regulators and trustees "shortly".

The signing of the RAA is expected to trigger the placing of the BSPS into the custody of the PPF, the industry lifeboat for members of defined benefit scheme.

Members of the BSPS will then have the option of transferring to a new Tata-sponsored scheme, under which they would see lower future increases to their pensions than would otherwise have been the case.

If they choose not to transfer, they would remain with the PPF.

SKY      News.