Tata Steel on Wednesday said that its British subsidiary has reached an agreement with the trade unions "to progress towards the closure" of its defined benefit pension scheme to future accrual.
The company explained that as part of the current agreement, all parties will work towards making Tata Steel UK a sustainable business.
According to the company, the agreement with trade unions would structurally reduce risks and help secure a more sustainable future for its British business.
The company said that by next week, it will start consultation with its employees on a proposal to close the British Steel Pension Scheme to future accrual.
"Employees would be offered a competitive defined contribution scheme," the company said in a statement.
"The company and trade unions have also agreed on the principle that subject to the structural de-risking and de-linking of the British Steel Pension Scheme fund from the business, Tata Steel UK will continue the existing blast furnace configuration in Port Talbot until 2021.
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"Further, based on achieving the necessary financial performance and cash flows as per the transformation plan of the UK business, the company will continue to invest across the UK sites to enhance the competitive position of Tata Steel UK in the European steel industry," it said.
According to Koushik Chatterjee, Group Executive Director, Tata Steel and Executive Director for its European business, the proposed changes to future pension provision and other employment terms are necessary to de-risk the company and help achieve long-term sustainability.
"We are also working separately on a necessary structural solution for the British Steel Pension Scheme fund," Chatterjee was quoted as saying in the statement.
"We look to other stakeholders such as the UK Government to play their part in addressing the UK's manufacturing competitiveness position especially with relation to energy prices."
Chatterjee added that Tata Steel UK has developed a long-term investment plan to make the business more competitive in the future.
"The delivery of the transformation plan in the next couple of years, combined with a structural solution for the British Steel Pension Scheme fund, is essential to provide the affordability and financial self-sufficiency for future investments and also service its financial obligation to its stakeholders," he said.
Currently, Tata Steel is Britain's largest steel manufacturer.
The company supplies almost 50 per cent of British carmakers' steel requirements, including body panels and chassis, and a range of advanced steels for the British construction industry which help to reduce buildings' energy use.
--IANS
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