 "Pension row might hit 60% of Tata Steel production in Europe")
Tata Steel might see nearly 60 per cent of its 17.4 million tonne (mt) production capacity in Europe getting shut if the ballot called by the employee unions of Tata Steel UK from Wednesday results in favour of a strike action.
To put it in perspective, the combined production capacity of 10.2 mt at three locations in the UK is larger than the company’s 9.7 mt capacity at Jamshedpur in India. The UK unions are locked in a dispute with the company about the proposal to change the British Steel Pension Scheme (BSPS). Should the ballot result in a vote to strike, it would be the biggest action in the UK steel sector in three decades.
“We started discussions with our UK unions last year about the need to modify our final salary pension scheme because of the scheme’s increasing deficit. The unsustainable growth in the deficit is mainly due to people living longer and low returns in the financial markets,” said a company spokesperson.
The firm has proposed to change it from a defined benefit scheme – which guarantees a pension based on earning and length of service – to one of defined contribution. These schemes are generally less generous and the size of the pension pot depends on the success of the investments the money is put into. Due to low return in the financial markets, this is expected to bring down employees’ pension significantly.
After failing to reach an agreement with the unions on the proposed changes, Tata Steel began a 60-day statutory consultation with scheme members on a proposal to close the scheme to future accrual.
The unions claim that under the changes, steel workers who opted to retire at 60 years would face a 25 per cent cut in their pension entitlements. On April 27, employee unions at Tata Steel’s UK subsidiary gave a legal notice about their intention to ballot their members from May 6 to 29 for industrial action in the dispute.
This might lead to about 17,000 members of British Steel Pension Scheme (BSPS) going on strike. The unions have urged their members to vote either in favour of strike action or action short of strike action. Tata Steel UK is not the only company facing a strike threat because of proposed changes in the pension scheme.
UK retailer Tesco has also proposed to replace its defined benefit pension scheme with a defined contribution scheme. Its retail unions have threatened to fight, too.
“Tata Steel remains open to unconditional talks with the unions to find resolutions to the very substantial challenges facing the pension scheme,” said the spokesperson.
Tata Steel Europe had a turnover of £8.83 billion in 2013-14 with earnings before interest, taxes, depreciation and amortisation of £314 million. This includes operations from both the UK and Netherlands. The company does not disclose its financial of individual plants. Its financial results for 2014-15 are likely to come this month.
17.4 MT: TATA STEEL EUROPE’S PRODUCTION
UK 10.2 MT
To put it in perspective, the combined production capacity of 10.2 mt at three locations in the UK is larger than the company’s 9.7 mt capacity at Jamshedpur in India. The UK unions are locked in a dispute with the company about the proposal to change the British Steel Pension Scheme (BSPS). Should the ballot result in a vote to strike, it would be the biggest action in the UK steel sector in three decades.
“We started discussions with our UK unions last year about the need to modify our final salary pension scheme because of the scheme’s increasing deficit. The unsustainable growth in the deficit is mainly due to people living longer and low returns in the financial markets,” said a company spokesperson.
The firm has proposed to change it from a defined benefit scheme – which guarantees a pension based on earning and length of service – to one of defined contribution. These schemes are generally less generous and the size of the pension pot depends on the success of the investments the money is put into. Due to low return in the financial markets, this is expected to bring down employees’ pension significantly.
After failing to reach an agreement with the unions on the proposed changes, Tata Steel began a 60-day statutory consultation with scheme members on a proposal to close the scheme to future accrual.
The unions claim that under the changes, steel workers who opted to retire at 60 years would face a 25 per cent cut in their pension entitlements. On April 27, employee unions at Tata Steel’s UK subsidiary gave a legal notice about their intention to ballot their members from May 6 to 29 for industrial action in the dispute.
This might lead to about 17,000 members of British Steel Pension Scheme (BSPS) going on strike. The unions have urged their members to vote either in favour of strike action or action short of strike action. Tata Steel UK is not the only company facing a strike threat because of proposed changes in the pension scheme.
UK retailer Tesco has also proposed to replace its defined benefit pension scheme with a defined contribution scheme. Its retail unions have threatened to fight, too.
“Tata Steel remains open to unconditional talks with the unions to find resolutions to the very substantial challenges facing the pension scheme,” said the spokesperson.
Tata Steel Europe had a turnover of £8.83 billion in 2013-14 with earnings before interest, taxes, depreciation and amortisation of £314 million. This includes operations from both the UK and Netherlands. The company does not disclose its financial of individual plants. Its financial results for 2014-15 are likely to come this month.
17.4 MT: TATA STEEL EUROPE’S PRODUCTION
UK 10.2 MT
- Port Talbot steelworks, West Glamorgan, Wales 4.9 million tonnes (mt)
- Scunthorpe steelworks (pictured), South Humberside, England 4.5 mt
- Rotherham steelworks, South Yorkshire, England 0.8 mt
- IJmuiden steelworks, The Netherlands 7.2 mt