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Tata Steel pension scheme deal announced

11 August 2017

"When the RAA takes effect, the British Steel Pension Scheme will be separated from Tata Steel UK and a number of affiliated companies", the company said in a statement.

A Tata Steel spokesman in the United Kingdom told ET that the parties involved in the pension deal are in "positive discussions and we are hopeful of reaching a final agreement shortly".

"There remains no certainty with regard to the eventual existence, size or form of the new scheme and the funding position and membership of any new scheme is still dependent on the results of the proposed voluntary membership transfer exercise", said Tata Steel.

Tata Steel UK, which employs about 6,250 across Wales, including 3,500 in Port Talbot, has offered to pay £550m into its now-defunct pension scheme, adding it will give the fund a 33% stake in its British business.

On Wednesday, a Tata spokesman said the parties involved in pensions talks were in "positive discussions and we are hopeful of reaching a final agreement shortly", meaning the company could soon its United Kingdom pension scheme from its businesses.

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It follows an announcement on May 16 that the key commercial terms of an RAA had been agreed in principle between the company and pension scheme Trustee.

Under the terms of the deal, Tata will pay £550m into the 130,000 member British Steel Pension Scheme (BSPS) which is now closed, they will also hand over a 33 per cent "economic equity" stake in the United Kingdom steel business which includes the Shotton plant.

"The RAA is one important milestone in company's journey towards a sustainable and enduring future, with pension obligations, whose risk profile would be consistent with the underlying business".

We fought to ensure that our members can choose whether they want to transfer to a new modified scheme, underpinned by Tata, or to remain in the BSPS and therefore receive PPF compensation.

He is referring to the mechanism that allows a company in the United Kingdom to separate itself from its pension scheme to avoid insolvency under strictly defined criteria, including being able to show the risk of insolvency within the next 12 months without the deal.

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Unions welcomed the RAA and the company's commitment to the new scheme, which put an end to the uncertainty their members had faced for over a year.

"Thyssenkrupp had already in the past pointed out that any (pensions) agreement would need to be closely examined", a spokesman for the German steel-to-elevators group said.

After the arrangement comes into effect, it would separate the British Steel Pension Scheme from Tata Steel UK and the pension scheme s other participating employers - certain subsidiaries of Tata Steel UK.

"The regulator is willing to work closely and constructively with employers who face real challenges in meeting their pension obligations due to hard trading conditions.This proposal brings greater certainty for pension scheme members and unlocks the possibility of restructuring the company, which in turn could lead to preserving jobs".

Lesley Titcomb, chief executive of the regulator, said: "We do not agree to these types of arrangements lightly but after several months of robust negotiations in this case, we believe that it is the best possible outcome for everyone involved in what is a very hard situation".

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Tata Steel pension scheme deal announced