Tata Steel U.K. Closes Pension Scheme To Future Accruals
A new contribution pension scheme will be in place from April 1, 2017.
Tata Steel Ltd. has said that it will close the British Steel Pension Scheme to future accruals from March 31 as it looks to cut costs to make its U.K. operations viable.
From April 1, employees of Tata Steel will save for retirement through a “new and competitive defined contribution pension scheme”, the company said in a statement.
Tata Steel had been talking to over 4,000 employees and trade unions on its proposal to close the pension scheme.
The company believes that finding a structural solution to address the risks from the pension scheme to the viability of the business is a crucial part of its ongoing U.K. transformation plan.Tata Steel Media Release
Tata Steel had signalled its exit from the U.K. on March 30, 2016, blaming the global oversupply of steel, cheap imports into Europe, high costs and currency volatility.
Securing the pension fund was one of the major challenges that Tata Steel had to overcome before it could go ahead and complete the planned sale of its U.K. operations.
U.K.’s biggest steel employer’s decision to exit had put the fate of over 11,000 employees in uncertainty. Three of Britain’s major worker unions, Community, Unite and GMB, staged 'Save Our Steel!' rallies demanding stronger government strategy to support the steel industry.
In December 2016, Tata Steel committed to invest £1bn over ten years into its British operations, and continue operating two blast furnaces at Port Talbot for at least five years.
At the same time, an agreement was announced between worker unions and Tata Steel for a consultation on replacing the current pension with a “defined contribution scheme”.
In February, members of the National Trade Union Steel Committee in the U.K. had voted in favour of closing the pension scheme to future accrual.