Trustees must seek more cash from Tata, say experts
TRUSTEES of the British Steel Pension Scheme should demand more cash from Tata Steel if a deal between the firm and trade unions to save the Port Talbot steelworks goes ahead, experts say.
A 60-day consultation between the firm and unions into the future of the pension scheme starts this week. Tata is planning to close the scheme to new contributions – though it would continue to pay existing members – and replace it with a less generous scheme.
In return it would keep Port Talbot’s blast furnaces running till 2021, avoid compulsory redundancies and invest £1billion in its plants over the next decade.
The pension scheme has 130,000 members but only one in 13 are still paying in. The scheme has £15billion in liabilities and the pension fund trustees said last week the scheme would end up in the Pension Protection Fund if it failed to close to new members, modify benefits and ensure it had adequate reserves.
However, independent pensions consultant John Ralfe said plans for a replacement scheme were unlikely to save Tata much money and urged pension trustees to demand a better deal.
‘Because major disposals have reduced Tata Steel’s creditworthiness, the pension trustees should demand higher deficit contributions, so the total annual cash contribution could easily go up,’ he said. Tata Steel and the pension fund trustees said talks on future plans were ongoing.
Alan Rubenstein, chief executive of the Pension Protection Fund, said: ‘If what comes out of this is a revised arrangement where Tata continues to stand behind the scheme, albeit one that is closed to future accrual, with existing benefits reduced but above PPF levels I can see that is something that might be appealing to the trustees and members of the scheme.’