The Regulated Apportionment Agreement (RAA) for the British Steel Pension Scheme (BSPS) is to be finalised “shortly”, Tata Steel has announced.

In its financial results for the quarter ending June 30, published on the Bombay Stock Exchange, 7 August, its group executive director (finance and corporate) Koushik Chatterjee said the company is in “advanced discussions with the BSPS Trustee, The Pensions Regulator and the Pension Protection Fund in relation to RAA, and are hopeful of reaching final agreement shortly”.

When contacted by Pensions Age The Pensions Regulator said it was not in a position to say when an agreement is likely to be reached.

In May it was announced the terms of the RAA had been agreed, which includes a payment of £550m paid by a member of the Tata Steel Group to the BSPS, and the provision of a 33 per cent equity stake in Tata Steel UK.

At the time the RAA terms were announced, TPR chief executive Lesley Titcomb said “there are still important details to be finalised before we are in a position to approve the RAA and we are considering these carefully in light of their impact upon the 130,000 pension scheme members and PPF levy payers”.

“Pension restructurings which involve an RAA are rare, and we will only approve an RAA where stringent tests are met, so that they are not abused by employers seeking to inappropriately offload their pension liabilities,” she added.

In its most recent results, the company said the £550m pay-out has led to Tata Steel’s net debt (Rs. 71,703 crore) being significantly lower than its gross debt (Rs. 87,812 crore) due to a build-up in its cash reserves to fund the payment.

The scheme closed to future accrual in March this year following a consultation with members and unions, with members becoming deferred pensioners. The last triennial valuation, as at 31 March 2014, found the scheme had a funding deficit of £90m.

Tata Steel UK has agreed that following an RAA, it will sponsor a new scheme, which will be offered as a voluntary option to existing members of the BSPS, as an alternative to the Pension Protection Fund (PPF). It will have lower future annual increases than the BSPS but would be better than PPF benefits and would “pose significantly less risk” for TSUK.

In June it was revealed that in the 12 months to 31 March 2017, that 482 members of the BSPS had transferred out of the scheme, as a result of increased cash value transfer offers.

The BSPS trustee declined to comment on the RAA at this stage.

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