Tata Steel UK workers vote to accept cuts to pension benefits
The vote allows Tata Steel UK to close its $18.7 billion BSPS to future accrual and replace the final salary scheme with a less generous defined contribution scheme
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London: Thousands of workers at Tata Steel’s sites in Wales, Scotland, South Yorkshire and Teeside in the UK on Wednesday overwhelmingly accepted the company’s offer to move from a “final salary pension” to a less generous scheme, potentially saving their jobs and assuring the future of its plants.
Tata had offered a package in December to retain its steel business in Britain instead of selling it, and the generous financial commitment in the pension scheme was seen as a major hurdle.
Tata Steel, which signed a definitive agreement to sell its UK specialty steels business to Liberty House Group for £100 million on 9 February, is also in talks to merge its European assets with Germany’s Thyssenkrupp. Following the pension deal, the talks are expected to pick up pace since the German company has been averse to taking on Tata’s UK pension liabilities in the event of a tie-up.
Three unions—Unite, Community and GMB—balloted their members on the package offered, and the result was 72% in favour.
Spokespersons for Tata Steel did not respond to requests for comments by emails, phone calls and text messages.
Tata’s December offer included a guaranteed, minimum five-year commitment to keeping two blast furnaces at the Port Talbot plant in Wales; a 10-year, £1 billion investment plan to support steel making at the site; a commitment to seek to avoid compulsory redundancies for five years; and a consultation on replacing the current pension with a “defined contribution scheme” involving maximum contributions of 10% from the company and 6% from employees.
The company’s new defined contribution scheme will cover its existing 11,000 UK employees. The firm is, however, seeking regulatory approval to cut benefits for all 130,000 British Steel Pension Scheme members and spin off the scheme into a standalone entity, Reuters reported.
Responding to the results, Roy Rickhuss of Community said, “This result provides a mandate from our members to move forward in our discussions with Tata and find a sustainable solution for the British Steel Pension Scheme”.
“We now expect Tata to make good on their promises and deliver the investment plan for the whole of their steel business. The UK government still has an important role to play and we fully expect them to deliver tangible support for steelmaking in the UK.”
Tony Brady of Unite said, “Steelworkers have made great sacrifices to ensure the UK’s world class steel industry has a future. Those sacrifices must be repaid by Tata Steel honouring its commitments on investment and job security. Anything less would be a betrayal and add to the deep mistrust that steelworkers now have for the company.”
Dave Hulse of GMB said, “Now that steelworkers have done their bit, it is time for the government step up and do theirs. Thousands of skilled jobs rely on steelmaking and the industry supports the whole UK manufacturing sector”.
“Instead of insulting steelworkers by classing their industry as a ‘low priority’, the government set out as strategy for steel that recognises it as a high priority for investment and innovation.”