Tata Steel has agreed a deal over its ongoing pensions dispute as part of which it will pay £550m to the British Steel Pension Scheme (BSPS) and give it a 33 per cent stake in its UK business.
The deal is subject to formal approval by The Pensions Regulator but Tata expects to reach a final agreement shortly.
The deal was announced as Tata Steel reported a fourth-quarter net loss of 11.68bn Indian rupees (£141.3m) after one-off items including non-cash pension curtailment charges. That compared with a net loss of 30.42 billion rupees in the same quarter a year ago.
Consolidated revenue for the quarter increased by 30 percent from a year earlier to 350.05bn rupees.
The BSPS Trustee Chairman, Allan Johnston, said: “I am pleased that agreement in principle has been reached with TSUK [Tata Steel UK] about sponsorship of a modified pension scheme subject to qualifying conditions.
“Although the PPF is an important safeguard for pension schemes generally, the Trustee believes that the BSPS has sufficient assets to offer members the potential for better outcomes by enabling them to transfer to another scheme offering modified benefits. For most Scheme members, these modified benefits are expected tobe of greater value than those they would otherwise receive by transferring into the PPF.
“TSUK’s willingness in principle to sponsor a new scheme post RAA, subject to conditions agreed with the BSPS Trustee, paves the way to allowing members to make a choice based on their personal circumstances. Discussions are progressing constructively and we expect to be in a position to communicate the final outcome to members soon.”
A PPF spokesperson said: “We can confirm that the key commercial terms of a Regulated Apportionment Arrangement (RAA) have been agreed in respect of the British Steel Pension Scheme and anticipate discussions concluding in the near future. This would meet our published principles, including that an insolvency event of the scheme’s sponsoring employer, Tata Steel UK, would otherwise be inevitable. Any RAA is subject to a 28 day period following an agreement leading to Pensions Regulator approval and PPF non-objection."
Lesley Titcomb, chief executive of The Pensions Regulator, said:
“There are still important details to be finalised before we are in a position to approve the RAA and we are considering these carefully in light of their impact upon the 130,000 pension scheme members and PPF levy payers.
“Pension restructurings which involve an RAA are rare, and we will only approve an RAA where stringent tests are met, so that they are not abused by employers seeking to inappropriately offload their pension liabilities."