LONDON (Reuters) - Tata Steel UK (TISC.NS) said on Wednesday it was working on a solution for its debt-laden British Steel Pension Scheme, after striking a deal with unions to close the scheme to future accruals as part of an agreement guaranteeing investment and jobs.
Britain’s biggest steelmaker has offered to keep production going at the country’s largest steel plant in Port Talbot, Wales, for at least five years, but wants to close the employees’ defined benefit scheme and replace it with a defined contribution scheme.
“The proposed changes to future pension provision and other employment terms are necessary to de-risk the company and help achieve long-term sustainability,” Koushik Chatterjee, group executive director Tata Steel and executive director for its European business, said in a statement.
Tata Steel UK will next week start consultation with its employees on a proposal to close the British Steel Pension Scheme to future accrual, it said.
Pension experts say the scheme may be spun off into the Pension Protection Fund, a pensions industry-backed life-boat for failing schemes that would cut benefits by around 10 percent for employees below retirement age.
Reporting by Carolyn Cohn; Editing by Rachel Armstrong