Tata Steel UK is to consult on a solution and the closure of its defined benefit scheme to future accrual, the firm announced on Wednesday (7 December).

After agreeing on a deal with its trade unions Community, GMB and Unite to close the British Steel Pension Scheme and replace it with a defined contribution scheme, the company is to begin a consultation with its employees next week.

Tata Steel’s new pension proposal has formed part of a wider proposal on employment terms, including a £1bn investment plan.

"The proposed changes to future pension provision and other employment terms are necessary to de-risk the company and help achieve long-term sustainability of the business," Tata Steel group executive director and executive director for its European business Koushik Chatterjee, said in a statement.

“The proposed changes to future pension provision and other employment terms are necessary to de-risk the [organisation] and help achieve long-term sustainability. We are also working separately on a necessary structural solution for the British Steel pension scheme fund.”

While discussions are set to continue, pension experts have predicted that the scheme may fall into the Pension Protection Fund.

Briefly mentioning Tata at a roundtable today,(8 December), PPF chief executive Alan Rubenstein said: “We are still trying to get to grips with yesterday’s announcement”.

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