Tata Steel has been lambasted for considering closing its UK pension scheme before making a £60m payment scheduled for next year.
Stephen Kinnock, the Labour MP for Aberavon, said it would be an “absolute disgrace” if Tata closed the scheme without making the payment and said the Indian company had “moral and social responsibilities”.
The British Steel pension scheme (BSPS) is a major obstacle to a rescue deal for Tata Steel UK, which employs 11,000 people and owns the Port Talbot steelworks, which is in Kinnock’s constituency in south Wales.
The BSPS has liabilities of more than £15bn and 130,000 members, making it one of the biggest retirement schemes in the country.
The future of Tata Steel UK has been in doubt since the Indian company announced in March that it was reviewing the future of the business amid mounting losses and its debts.
Tata is in talks with the German company ThyssenKrupp about merging their European steel operations, but the UK business is only likely to be included if the pension scheme can be restructured.
Ratan Tata is understood to be keen to keep the UK business, either through a merger with ThyssenKrupp or keeping it wholly owned. However, an overhaul of the pension scheme is considered vital by the Indian company.
Tata was initially in talks with the government about changing UK laws so the annual increase in benefits was pegged at a lower level of inflation, which could have cut billions of pounds from the future liabilities.
The government is considering a consultation on potential changes to the pension scheme, but Tata is understood to have shelved the inflation plan and is considering closing the scheme as part of a different restructuring, the full details of which are unknown.
Tata is due to make the £60m payment into the pension scheme in March after an agreement with trustees to financially support it. A further payment is due in 2018.
Kinnock said he hoped Tata would “stand by their obligations to pensioners and steelworkers. It is an absolute disgrace if these reports are true. Tata have not only legal, but also moral and social responsibilities to the members of the BSPS and the workforce across the UK.
“To seek to escape those responsibilities and avoid their obligations, by exploiting a technicality, is not only a slap in the face to the workers and pensioners who have sought to work with the company to find a resolution, but it should trouble us all.”
In response, Tata said it remained in discussions about the future of the pension scheme.
A Tata Steel spokesman said: “Tata Steel UK continues to be in active dialogue and engagement with all relevant stakeholders to develop options to support a sustainable future for the business and find a solution to address the costs, risks and volatilities of the BSPS and the risks this brings to the future of the Tata Steel UK business. These discussions are currently ongoing with stakeholders as it is important to continue to explore viable alternatives for the BSPS.
“The UK’s Department for Work and Pensions launched a public consultation in May 2016 to explore certain alternate options for the BSPS. The company awaits the outcome of that consultation but in the meantime is actively exploring alternative courses of action.
“Tata Steel is committed to working with the pension scheme trustee, the trade unions and relevant regulatory and government bodies to achieve a fair outcome for the British Steel pension scheme and its members against the backdrop of the difficult business conditions and the structural challenges the steel industry is currently facing.”
This article was written by Graham Ruddick, for theguardian.com on Wednesday 9th November 2016 18.47 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010