Tata Steel has today (August 11) announced that it has signed the documentation for a Regulated Apportionment Arrangement (RAA) with the Trustee of the British Steel Pension Scheme (BSPS).
This will separate the BSPS from Tata Steel and allow for the creation of a new pension scheme, with members’ accrued benefits protected, but with smaller annual increases in pensions. Tata Steel will stand behind this new scheme.
Members of the BSPS will have the option of switching to the new scheme (the new BSPS) or moving with the old BSPS into the Pension Protection Fund (PPF), a government-backed lifeboat that takes over schemes when businesses are on the brink of insolvency.
Roughly 8,000 people are employed by Tata Steel in England and Wales, but the BSPS has more than 130,000 members across the UK.
In February, Tata steelworkers voted to accept changes to their pensions in exchange for the preservation of 8,000 jobs over the next five years and £1bn in modernising investment in the business.
But steelworkers were angry that for months after the vote there was little clarity over how, exactly, their pensions would be restructured.
“We’ve had to accept the closure of our pension scheme to future accrual and we haven’t yet had any details about how it’s going to change,” Unite SIMA branch chair Anthony Simpson, who works at a site in Shotton, told UNITElive in May.
Later in May, Tata put forward an outline agreement on how it would restructure the scheme. It pledged to pump £550m into the BSPS and would also give it a 33 per cent stake in the business as the scheme is spun off to the Pension Protection Fund (PPF).
Tata also said it would give steelworkers the option of a modified scheme.
Deal formally agreed
Now that the deal is formally agreed and the uncertainty is over, Unite and other steel unions have warned that Tata must closely and transparently communicate with its workers as they decide whether to switch to the new scheme or continue with the old scheme which has been spun off into the Pension Protection Fund (PPF).
“We welcome the RAA announcement which includes a commitment that Tata will stand behind a new scheme with reduced annual increases,” steel unions Unite, GMB and Community said in a joint statement today (August 11).
“For over a year our members have feared for their security in retirement, and this announcement helps to bring that uncertainty to an end.
“We fought to ensure that our members can choose whether they want to transfer to a new modified scheme, underpinned by Tata, or to remain in the BSPS and therefore receive PPF compensation.
“Now that this choice is being delivered, the company and the trustees must step up to provide the necessary information and guidance to enable every member to make an informed decision in their best interests.
“Our members have been extremely disappointed at the unacceptable lack of communication in recent months, and this has to change immediately,” the unions warned. “The company and the trustees must remember they are dealing with people’s long term future, their life savings, and their family’s financial security; it is vital members are given all the support that they need.”