London: A new pension fund backed by Tata Steel UK, a unit of India’s Tata Steel, will be set up after meeting minimum size and funding criteria, paving the way for the firm’s merger with Germany’s Thyssenkrupp.
The trustee of the British Steel Pension Scheme (BSPS), a 124,000 member final salary scheme from previous owner British Steel, said in a statement the new BSPS would go ahead on 28 March as planned.
“This is very good news for the 83,000 members who wanted to receive their benefits from the New Scheme and chose to switch to it," said Alan Johnston, who will now act as chairman to the trustee of the new BSPS.
Britain’s pensions regulator agreed a deal last year to allow Tata Steel UK to cut scheme benefits and set up a new BSPS in return for a £550 million one-off payment to the scheme.
Tata Steel UK remains the formal backer of the new BSPS.
Earlier this year, UK lawmakers said Britain’s markets watchdog was too slow to prevent “vulture" financial advisers from ripping off steelworkers faced with critical decisions over their £14 billion ($19.6 billion) pension scheme.
Some 25,000 scheme members failed to opt to transfer into the new scheme, meaning they end up in a lifeboat known as the Pension Protection Fund (PPF) by default, potentially a worse outcome for them.
Alternatively, some of the 25,000 might have opted to transfer their pension into other investments, but many who took that option were encouraged by dubious financial advisers to sign up to risky, unsuitable investments.
After Tata’s pension hurdle was overcome last year, Thyssenkrupp and Tata agreed to merge their European steel operations to create the continent’s No.2 steelmaker. The deal is expected to be finalised late this year. Reuters