No purchaser of Tata’s British interests is willing to take on the financial consequences of the employees’ pensions liabilities. Legally dissociating Tata Steel from the British Steel Pension Scheme is a bold move by the Conservative Government and an attempt to reassure potential buyers of Indian Group Tata’s British business that they will not be lumbered with financing a massive pensions deficit. The British Steel Pension Scheme covers 130,000 members (workers and retirees of the nation’s steel industry including those in Tata) and is in a parlous financial state. Unions fear that the government’s unusual move will result in unwelcome consequences.
Tata welcomed the government launch of consultation on the topic on Thursday 26 May. Separating Tata from the pensions problem is a prerequisite for reforming the British Steel Pension Scheme that needs overall changes to its pension fund regulations in order to save some £2.5 billion (€3.3 billion). The idea is to index future payments to the normally lower Consumer Price Index (CPI) as compared to the Retail Price Index (RPI) currently. Such a change would avoid moving steel worker pensions o
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