Tata Steel to close pension fund

The firm intends to close the £15-billion British Steel Pension Scheme to future contributions before a £60-million payment deadline on March 31, 2017

Tata Steel might be planning to close down the deficit-hit pension fund at the heart of its UK steel crisis, according to a media report on Wednesday.

The Financial Times quoted people briefed on the issue as saying that Tata Steel intends to close the  £15-billion British Steel Pension Scheme to future contributions before a £60-million payment deadline on March 31, 2017, in order to plug the mounting deficit.

A 60-day legally required consultation period means an official announcement of the closure was expected by the end of the month, the newspaper said. 

“Tata continues to be in active dialogue and engagement with all relevant stake-holders to develop options to support a sustainable future for the business and find a solution to address the costs, risks and volatilities of the British Steel Pension Scheme and the risk this brings to the future of the Tata Steel UK business,” a Tata Steel UK statement said, adding it will keep exploring “viable alternatives” for the pension scheme.

The future of Tata Steel UK and its nearly 11,000 workers have been on the line since the Mumbai-headquartered firm announced in March that it would be reviewing the future of the business.

The UK media has earlier reported that Ratan Tata, the interim chairman, is analysing whether to go ahead with a potential ThyssenKrupp joint venture deal for the Port Talbot plant in Wales – the UK’s biggest steelworks – and proposals to sell Tata Steel's speciality steel arm, which employs 2,000 people in north-east England.

He is expected to make a decision within weeks.

The biggest obstacle in the way has been the British Steel Pension Scheme, one of Britain’s biggest with 130,000 retired and working members and a deficit that is expected to have increased significantly from last year’s level of £700 million.

A closure to future contributions would mean that those who have already paid into the scheme will be paid their pensions but further financial burden would be considerably arrested.

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