Tata Steel moved back into profit at the start of this year, in large part due to a boost of more than £1.5bn from the restructuring of its pension scheme, prompting unions to demand that cuts to members’ benefits be reversed.
Britain’s Pensions Regulator agreed last year to allow Tata Steel UK to reduce its £15bn pension scheme liabilities. Of 122,000 UK pension scheme members, 83,000 opted to join the new British Steel pension scheme (BSPS) – one of the biggest in the country – and took a cut in benefits, in return for investment to secure jobs. Pension increases under the new scheme were reduced to the statutory minimum, effectively increases are now based on the consumer prices index rather than the retail prices index, which means they will be lower.
The National Trade Union Steel Coordinating Committee, which includes the Community and Unite unions, said the unions had helped deliver the new British Steel pension scheme because “all the experts told us the alternative was the inevitable insolvency of Tata Steel UK. It was always expected the new BSPS would start with a significant buffer to enable it to pay out benefits to all members on a low-risk basis. We should be absolutely clear that this buffer is not Tata’s money, it is scheme members’ money which is ringfenced to pay out benefits over the lifetime of the scheme. The surplus for the new BSPS is higher than we expected, which we welcome as it strengthens our case for benefits to be restored.”
Frank Field, the Labour MP and chair of work and pensions committee, said on Wednesday: “This is a promising beginning that offers some hope to the British Steel pensioners, who were left stranded at the mercy of the vultures circling the scheme for too long. Tata should clearly restate its commitment to increase payments to pensions at the earliest opportunity, as agreed with the trustees.”