GRAHAM HISCOTT Tata forges a pension deal Retirement fund to own third of firm

TATA Steel has agreed a deal to offload its £15billion pension scheme – paving the way for a mega merger.

Under the plan, Tata will pump a one-off £550million into a new scheme in exchange for no longer having to inject ongoing funds.

In return, the new scheme would end up owning a third of Tata Steel UK.

The deal should safeguard thousands of jobs at Tata Steel, which runs the Port Talbot plant in South Wales.

It also removes an obstacle to a possible merger between Tata Steel and German firm Thyssenkrupp. However, most pension fund members will get less in retirement than if the current scheme had continued. But that’s better than the alternative – which is ending up in the Pension Protection Fund.

Koushik Chatterjee, Tata Steel’s group executive director, called the agreement “one important milestone” to securing the firm’s future.

Lesley Titcomb, chief executive of The Pensions Regulator, said: “We do not agree to these types of arrangements lightly but after several months of robust negotiations in this case, we believe that it is the best possible outcome for everyone involved in what is a very difficult situation.”

Steelworkers’ union Community, along with the GMB and Unite, issued a joint statement welcoming the agreement.

It said: “For over a year our members have feared for their security in retirement, and this announcement helps to bring that uncertainty to an end.

“Now that this choice has been 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.”

Labour MP Frank Field, chairman of the Commons Work and Pensions Select Committee, said: “It is always disappointing when pension promises are not met in full, but this deal should be cautiously welcomed as potentially preserving jobs and providing more certainty for British Steel pensioners.”