UK trade unions split over Tata Steel’s pension plan
The biggest trade union in the UK has expressed reservations about Tata Steel’s proposed solution for pension liabilities, even as another union has backed the plan.
Tata Steel, the country’s largest steel producer, is expected to announce on Friday its plan to detach the existing pension scheme from the business and offer a choice to its employees to either join the Pension Protection Fund (PPF) or be part of a new British Steel Pension Scheme (BSPS).
The company is expected to approach existing members of the scheme in September for the same. According to trade union sources close to the development, Tata Steel will be creating a new scheme, BSPS-2, which will be sponsored entirely by Tata Steel UK.
“We do not know how much the British Steel Pension Scheme-2 would cost Tata Steel UK but we understand that the company will be sending out letters to the members in early September, asking them to make a choice,” a representative of Unite, Britain’s biggest trade union, told Business Standard on Thursday.
About 6,250 people are employed by Tata Steel across Wales, including 3,500 in Port Talbot. “Depending upon the division (of members) towards the schemes, there will be slicing of Tata Steel UK assets to contribute funds towards the two schemes,” said the Unite representative.
“These are the intricacies of the agreement the firm is said to have had with The Pensions Regulator, Pension Protection Fund and BSPS trustees, and we (trade unions) do not know how sustainable this (solution) is going to be,” he added. Unite has reservations regarding Tata Steel’s agreement as it is of the view that the company’s announcement of “retention” payments to its high-ranking staff across UK operations, about 12 weeks after the closure of £15-billion retirement scheme, has left a bitter taste.
“It is the timing of the disbursement of funds that has left a bitter taste. Tata Steel could have paid their high-ranking employees even by the end of the year. Why soon after the closure of the retirement scheme?” he said. Tata Steel in July paid its top European managers loyalty bonuses totalling about £25m after its UK workers accepted a pension cut to keep the British business alive.
Officials of Community Trade Union, on the other hand, are ready to welcome the new arrangement to be made by the company. “At least this arrangement would bring more clarity on way ahead for Tata Steel UK operations,” said a representative of Community.
The restructuring of Tata Steel pension liabilities could pave way for proposed merger with Germany’s Thyssenkrupp. In its earnings, Tata Steel’s European operations witnessed improvement in profitability in the June quarter as against the corresponding period last year.