Tata Steel sheds UK pension fund, boosting prospects for Port Talbot. Tata Steel has ditched its £15bn UK pension fund after receiving the green light from regulators, boosting the prospects of the Port Talbot steelworks. The company said it had received approval from the Pensions Regulator and that it had separated the British Steel Pension Scheme from its UK business.
Tata had claimed that the retirement fund was a financial drag that threatened to pull the country’s largest steelmaker into insolvency, throwing thousands of jobs and a bedrock industry into doubt. The resolution follows months of talks between the company, UK pensions bodies and regulators and trade unions and will offer renewed hopes for the future of a sector that was in the doldrums just over a year ago.
Tata Steel pension scheme
The separation of the pension scheme was done through a rarely-used mechanism called a regulated apportionment arrangement (RAA), which was cleared by regulators. As part of the arrangement, Tata Steel UK has paid £550m into the scheme and also given it shares equivalent to a 33 per cent stake in the business.
The company will also sponsor a new pension scheme, which all members of the old scheme will have the option to transfer into, that will have lower future annual increases for pensioners. Tata Steel UK said this would “pose significantly less risk” for the company.
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