Tata Steel is reportedly ‘two to three months’ away from reaching a deal with regulators to allow it to severe ties with the British Steel Pension Scheme.

According to The Telegraph options include transferring the BSPS into a new scheme with lower benefits to ring-fence the company against further liability or moving the scheme into the pension into the Pension Protection Fund. However, sources told the paper that the “onerous” levy for joining the latter had made this path less likely.

As a result of a consultation, the £15bn pension scheme is set to close to future accrual on Friday 31 March, with members transferred to a new defined contribution scheme. However, this coincides with the start of its next triennial valuation which is expected to show an increase in the scheme’s deficit to £2bn.

The new DC scheme will offer maximum contributions of 10 per cent from Tata and 6 per cent from employees. Tata workers in their 50s, with plans to retire early could also make a one-off contribution of up to £10,000, it has been said.

Commenting on the closure, the company said it continues to be “deeply engaged” with the pension scheme trustee, the trade unions and relevant regulatory and government bodies to identify the best prospects for the future sustainability of its UK operations and a “fair and practical outcome for the members of the British Steel Pension Scheme”.

“The company believes that finding a structural solution to address the risks from the pension scheme to the viability of the business is a crucial part of its ongoing UK transformation plan,” it said.

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