The final move to secure Tata steelworkers’ pensions has been announced, ending any fresh doubts about future payments.
The Indian steel giant is set to replace the British Steel Pension Scheme (BSPS) with a new scheme.
Workers voted earlier this year to accept lower benefits in return for investment which will secure jobs.
Tata Steel UK said it had signed documentation for a Regulated Apportionment Arrangement (RAA) with the Trustee of the British Steel Pension Scheme, offering “more sustainable outcomes” for pensioners, employees and the business.
The move is expected to clear the way for Tata to merge its European steel business with German firm Thyssen Krupp.
When the RAA takes effect the British Steel Pension Scheme will be separated from Tata Steel UK and a number of affiliated companies.
Tata Steel will pay £550 million into BSPS and will also give BSPS a 33% equity stake in Tata Steel UK Limited (TSUK).
Koushik Chatterjee, Tata Steel’s Group Executive Director, said the RAA process has been a long and detailed one, and thanked everyone involved, including the UK and Welsh governments, for their constructive engagement through the process.
Mr Chatterjee said: “Considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the RAA presents the best possible structural outcome for the members of the British Steel Pension Scheme and for the Tata Steel UK business.
“The RAA is one important milestone in Tata Steel UK’s journey towards a sustainable and enduring future, with pension obligations, whose risk profile would be consistent with the underlying business.”
The steel trade unions, Community, Unite and GMB, said in a statement: “We welcome the RAA announcement which includes a commitment that Tata will stand behind a new scheme with reduced annual increases.
“For over a year our members have feared for their security in retirement, and this announcement helps to bring that uncertainty to an end.”
Tata Steel recently completed the sale of its 42 and 84-inch pipe mills in Hartlepool to Liberty House Group. It still has a 20-inch tube mill which employs 270 people.