Economy

Tata Steel separates itself from British Steel Pension Scheme

Tata Steel separates itself from British Steel Pension Scheme”

Detaching the BSPS from Tata clears a major hurdle to the company's hoped for merger with German steel maker ThyssenKrupp, a deal which would create Europe's second-largest steel business with a special focus on supplying the British and German auto industries.

As part of the arrangement, a payment of 550 million pound has been made to BSPS by Tata Steel UK and shares in Tata Steel UK, equivalent to 33 per cent stake, have been issued to the BSPS trustee, the steel giant said. In a statement, the combined National Trade Union Steel Co-ordinating Committee said: "We do not celebrate the confirmation of the RAA, but under the circumstances this represents the best outcome for members of the BSPS".

Last month, Tats Steel had announced clinching of the deal facilitating detachment of the BSPS from its United Kingdom business. All members of the BSPS will be given the option of joining the new Tata scheme paying lower benefits or entering the Pension Protection Fund.

If the qualifying conditions are met, members who choose to, will transfer to the new scheme.

"Although much work is still needed to ensure the business is competitive in future, the next step in this pensions process involves necessary formalities to set up the new scheme with a lower-risk profile following the necessary member consent process led by the trustee".

Germany's Thyssenkrupp could reach an agreement in principle this month to merge its European steel business with Tata Steel, Reuters reported.

"This will take some time to implement, given the wide membership base".

The net financial impact of the RAA including payment of the agreed 550 million settlement amount will be reflected in the Q2 FY 2018 financials for the company.

Shareholders last week put pressure on Thyssenkrupp to clinch a deal after talks over a potential steel combination dragged on for a year and a half, mainly held up by negotiations over Tata Steel's British pension liabilities.

About 8,000 people are employed by Tata Steel across England and Wales, including 3,500 in Port Talbot.



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